In a recent statement, the Blockchain Association of Singapore (BAS) opposed the proposal by the central bank to ban token lending. The group referred to the ban as “overly restrictive.”
BAS Opposes MAS Proposal To Ban Lending On Crypto Platforms
On October 26th, 2022, Singapore’s central bank, the Monetary Authority of Singapore (MAS), released a consultation paper that contained a proposed ban. According to the ban, digital payment token firms cannot offer “credit facility” to users both in crypto and fiat.
However, the BAS believes the central bank’s proposal is a harsh step. The blockchain group voiced its displeasure in written feedback to the MAS, arguing that a total ban might force crypto users to lend their tokens to unregulated offshore firms.
In addition, the group asserted that most users are attracted to lending because of the interest they can earn. While speaking in a recent interview, the Chairman of the BAS board, Chia Hock Lai, stated that the central bank should adopt a more targeted approach.
This approach includes educating crypto holders about the risks of using unregulated exchanges. The Chairman further said:
“Although the central bank’s proposal is well-intended, it might have unexpected effects on the market if fully implemented. Users might have to lean towards unlicensed crypto service providers.”
Also read:Furthermore, Singapore regulators have also asked for laws that will stop crypto firms from using their tokens to generate yield. The passage of this proposal into law would ban individuals from taking loans to buy tokens.
BAS Calls For Transparent And Equitable Laws
The BAS believes lending tokens is one way most crypto users generate funds with expectations of high interest. However, the group acknowledged that limitations on token lending are necessary but noted that they should not be strict.
According to the BAS, a blanket ban could have unforeseen consequences. Notably, the group clamored for a balanced regulatory approach that would consider the risks and benefits of the crypto market.
Finally, the association stressed the need for transparent and equitable laws that safeguard consumers without impeding industry innovation. Meanwhile, the MAS’s consultation paper released last year came when the country faced a series of crypto-related crises.
This includes the stoppage of withdrawal on Vauld, Hodlnaut, and Three Arrows Capital (3AC). Hodlnaut and Vauld paused withdrawals indefinitely on its platform last year, citing financial issues.
As a result, users who had invested in these platforms could not access their funds. Three Arrows Capital had filed for Chapter 15 bankruptcy after its investment in the Luna token, which depegged in March 2022, turned to zero.
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