Central Bank of Singapore Seeks Comments on Crypto Leverage Ban

  • Proposal aims to prevent retail investors from buying crypto with credit cards and trading with leverage
  • Stablecoin issuers would also be required to strengthen anti-money laundering and anti-terrorist financing controls

The Monetary Authority of Singapore (MAS), the country’s central bank, is seeking public comment on proposed measures to strengthen crypto and stablecoin policy in the wake of Terra’s dramatic collapse.

In two consultation papers released on Wednesday, MAS invites comments on a range of issues relating to digital assets. It is the largest set of proposals the country has devised since 2019.

MAS, which also serves as Singapore’s main financial regulator, imposes a number of restrictions on providers of digital payment token services, namely exchanges, including prohibiting them from offering inducements to retail customers.

The move would reinforce existing regulations put in place earlier this year, when MAS prohibited service providers from advertising or promoting to the public through any means except their own websites.

MAS is also seeking comments on proposed restrictions on debt-funded and leveraged crypto transactions in an effort to prohibit vendors from accepting credit cards. The bank even offers an outright ban on leveraged trading for retail clients.

Effective measures to protect private keys and the storage of client cryptography are explored with an emphasis on ensuring that any member of staff has access to client funds.

Singapore’s regulatory tightening follows the saga of now-insolvent crypto hedge fund firm Three Arrows Capital, which was headquartered in the island city-state.

It was revealed earlier this year that some of the industry’s biggest lenders, including Celsius Network and Voyager Digital, had exposure to the fund as it suffered from its own poor investment decisions, including in the imploded Terra ecosystem. .

As such, MAS offers suppliers to put in place appropriate risk management controls and to segregate customer assets in the event of insolvency and hardship for certain companies.

The appointment of an independent custodian for all service providers will also be debated for four weeks from now.

Singapore Central Bank Could Boost Local Crypto Credibility

In a consultation paper on stablecoins, MAS seeks to increase its powers over single-currency pegged stablecoins (SCS) issued by companies registered within its borders.

MAS intends to create a separate category to meet the needs of SCS issuers under the State Payment Services Act, requiring licenses for issuers whose token exceeds $5 million.

The rules would not necessarily apply to the biggest stablecoins in the crypto space, such as Tether and Circle, as both companies are registered outside of Singapore.

The largest Singapore dollar-pegged stablecoin, XSGD, commands a market capitalization of less than $53 million, while Tether and Circle together manage over $110 billion in circulating supply.

MAS is commenting on whether there might be reason to extend its regulatory reach to stablecoins issued elsewhere, although it’s unclear exactly what that would look like.

In all cases, SCS issuers regulated in Singapore will be required to comply with existing anti-money laundering and terrorist financing requirements, as well as technology and IT risk management currently applicable to all service providers. regulated payment.

Additionally, the regulator wants regulated banking entities to have a sufficient legal trail to issue their own stablecoins. MAS is also considering rules to bolster treasuries of stable reserve assets for institutions and non-bank issuers.

“Additional regulations on stablecoins help build credibility for a volatile asset class, and currency-based tokens should be held to a higher standard given they have much broader payment applications. said Chen Zhuling, CEO of Singapore-based staking solutions company RockX. , Blockworks said in an email.

Public comments on both proposals are invited until December 21 this year. A definitive timetable has not yet been established for the implementation of the measures.


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  • Sebastien Sinclair

    blockages

    Senior Reporter, Asia News Desk

    Sebastian Sinclair is a senior reporter for Blockworks operating in Southeast Asia. He has experience covering the crypto market as well as some developments affecting the industry including regulation, business, and mergers and acquisitions. It currently does not hold any cryptocurrency. Contact Sébastien by e-mail at [email protected]