Singapore's MAS Outlines Measures to Curb Cryptocurrency Speculation
Summary:
Singapore's Monetary Authority (MAS) has outlined five steps for Digital Payment Token (DPT) service providers to mitigate speculation in cryptocurrency investments. These include assessing a client's risk understanding, avoiding trading incentives, refusing financing or margin transactions, rejecting domestic credit card payments, and excluding cryptocurrency holdings from a client's net worth calculations. The measures are part of MAS's efforts to protect consumers from the significant risks associated with speculative cryptocurrency trading.
Acting on feedback regarding its forthcoming Digital Payment Token (DPT) rules, Singapore's Monetary Authority (MAS) has outlined steps for DPT service providers to mitigate speculative behavior in cryptocurrency investments. Singapore's de facto central bank, the MAS, disclosed five strategies to assist retail consumers in steering clear from speculative price action. Service providers must first assess a client's risk understanding before offering cryptocurrency services. They were also advised to abstain from providing incentives for cryptocurrency trading. As a third guideline, financing, margin, or leverage transactions can't be offered by providers. Another tactic believed to hinder speculative behavior is the rejection of credit card payments issued domestically. Lastly, cryptocurrency possessions will be disregarded when calculating a client's net worth. Deputy Managing Director of Financial Supervision at MAS, Ho Hern Shin, commenting on the guidelines said that while these conduct and customer access measures can help, they cannot protect clients from losses arising due to inherently risky cryptocurrency trading. MAS highlighted that speculative trades in cryptocurrencies entail "considerable risks and consumer harms," in part driven by unverified success tales, celebrity approvals and the fear of missing out on profits. On November 15th, Singapore's central bank expanded Project Guardian, adding five new industry trials to test different tokenization use-cases. MAS explained that these efforts under Project Guardian will facilitate the institutional adoption of digital assets while enhancing liquidity, uncovering investment potential, and boosting financial market efficiency. The five pilot projects were split among 17 financial institutions belonging to Project Guardian, including Citi, T. Rowe Price, Fidelity International, Ant Group, BNY Mellon, OCBC, JPMorgan Apollo, and Franklin Templeton. In addition to these pilots, MAS initiated Global Layer One to examine the architecture of an open digital infrastructure for hosting tokenized financial assets and applications.
Published At
11/24/2023 6:51:19 AM
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