Singapore’s Monetary Authority Strengthens Cryptocurrency Regulations: Local Credit Cards Banned, Unveiling a Comprehensive Framework for Safer Trading
Cryptobros, take note: Soon, the luxury of purchasing cryptocurrencies through local credit cards via digital payment token (DPT) services will be a thing of the past.
The Monetary Authority of Singapore (MAS) made a significant announcement on Thursday, 23 November 2023, revealing plans to restrict the trade of digital assets, with these changes set to take effect in mid-2024.
What Other Changes Are There?
This is not the first instance of Singapore tightening regulations surrounding cryptocurrencies.
In January 2022, MAS placed a ban on crypto service providers advertising their services in public spaces or through third parties like social media influencers. They were only permitted to promote their offerings on their official corporate websites or social media platforms.
Building on these restrictions, MAS introduced a fresh set of rules in July 2023 that concentrated on firmly segregating companies’ assets from those of individuals. This prevented firms from lending or staking retail customers’ assets.
Alongside the prohibition on using local credit cards for crypto purchases, MAS implemented additional measures:
- Crypto service providers are now barred from offering incentives to encourage retail users to trade digital tokens.
- They are also prohibited from providing financing, margin, or leverage transactions.
- Moreover, there are now limits on the value of cryptocurrencies used in determining a consumer’s net worth.
These measures were the culmination of a comprehensive year-long public consultation and review process.
A Risky Investment with Riskier Outcomes
MAS, aiming to curb potential consumer harm, has been consistently cautioning about the risks associated with cryptocurrency trading since 2017.
Despite repeated warnings, some individuals remain drawn to cryptocurrency trading, resulting in substantial losses and financial distress when these digital assets collapsed.
Most notably, in mid-May of 2022, a couple in their 30s saw S$2.3 million wiped out from their bank accounts following the collapse of TerraUSD, once hailed as one of the world’s largest stablecoins.
Another young investor lost over half a million dollars during the same catastrophe.
Yet, several investors remain undeterred, stating that they would continue investing as they believe in cryptocurrency’s potential.
While some investors display resilience, others struggle to recover from the volatile nature of cryptocurrency.
Describing cryptocurrencies as “inherently speculative and highly risky,” MAS acknowledges that these measures may not insulate losses but aims to protect customers’ interests in the future.
Ms Ho Hern Shin, the deputy managing director for financial supervision of MAS, advised consumers to “remain vigilant and exercise utmost caution when dealing in DPT services” and emphasized avoiding unregulated entities, including those based overseas.
At the Singapore FinTech Festival 2023, Managing Director of MAS Mr Ravi Menon criticised cryptocurrencies, stating that they “failed the test of digital money.”
He highlighted their poor performance as a medium of exchange or store of value, noting sharp speculative swings in prices and significant losses suffered by many cryptocurrency investors.
You can also watch this video to know what happened to Binance, the world’s largest cryptocurrency exchange: