Singapore Monetary Authority proposal aims to protect cryptocurrency traders from losing large sums of cash – Copyright AFP Roslan RAHMAN
The central bank said Wednesday that people considering trading cryptocurrencies in Singapore should prove they know what they are doing in order to prevent ignorant investors from going bankrupt. said he might have to take a test for
Asia’s financial hubs have taken cautious steps to expand their digital asset markets, but the risks associated with trading digital coins have been daunting, especially among smaller investors lured by the tale of rapid wealth. I am warning you.
“Cryptocurrency trading is very risky and not suitable for the general public,” the Monetary Authority of Singapore (MAS) said when it unveiled its proposals to protect traders.
“However, cryptocurrencies play a supporting role in the broader digital asset ecosystem, making banning them impractical.”
Under a plan to face public scrutiny before the bill becomes law, MAS calls for cryptocurrency service providers to communicate more transparently about risks so consumers can make informed choices. To do.
Investors are also required to undergo a test to assess their understanding of the risks before being allowed to trade, and are prohibited from purchasing units using credit cards or payment apps.
If the applicant fails to answer questions correctly, the service provider may provide “educational materials to enhance the customer’s knowledge of the risks. This is limited to questions answered incorrectly by the retail customer. You shouldn’t.”
According to MAS, no incentives are allowed to encourage consumers to invest in cryptocurrencies, and service providers must also adhere to certain standards regarding how they conduct business.
Following violent volatility and a series of high-profile collapses, there has been global pressure to regulate the crypto market, some of which has occurred in city-states, taking a toll on its reputation as a potential crypto hub.
In June, Singapore-based cryptocurrency hedge fund Three Arrows Capital collapsed, placing Hodornotes (city-state-based cryptocurrency lenders) under interim judicial control.
Do Kwon, a fugitive South Korean national who founded the cryptocurrency Terra, was also based in the city-state.
Despite the risks, digital currencies continue to attract investors, MAS said
Because cryptocurrencies are not backed by real-world assets, their prices are highly volatile and trading is highly speculative.