In recent crypto news, cryptocurrency traders in Singapore were thrown into abrupt shock as the Monetary Authority of Singapore (MAS) announced its plans to implement new stringent regulations aiming to protect investors in its territory against speculative risks.
According to the report, the MAS recently introduced a new set of regulations to discourage retail investors from participating in speculative crypto trading. Furthermore, reports showed that the new rules, which contained five main instructions for platforms that provide Digital Payment Token services, were targeted at preventing potential losses and mitigating risks that come with investing in crypto.
It also aimed to reduce the impact of unverified testimonies and promote endorsements in the cryptocurrency ecosystem. In addition, the report states that one of the core parts of the rules was that before offering any services to their customers, Digital Payment Token service providers have to examine their risk awareness level.
MAS Aims To Discourage Speculative Trading Behavior
It explained that by properly evaluating a customer’s understanding of the vulnerabilities involved in crypto investment, service providers would figure out the best way to offer their services to them. Furthermore, in the new regulation, MAS discourages DPT platforms from incentivizing customers for trading cryptocurrency. The instruction was reportedly aimed at dissuading retail investors from speculative trading driven by enticing rewards or bonus offers, which often cause impulsive investment decisions without proper knowledge or plans. Additionally, MAS has reportedly placed a ban on leveraged transactions, margin trading, and financing related to crypto to curb speculative trading behavior. With limiting orders, the authority hopes to prevent investors from participating in high-risk trades beyond their financial capacity. Another guideline introduced by the Singapore regulator was prohibiting the use of credit cards issued by local authorities to pay for crypto purchases. This aimed to prevent investors from using their credit card in speculative trading settlements to mitigate financial risks.
Speculative Trading Increases Despite MAS Laws
Moreover, MAS has declared that citizens’ crypto holdings would not be considered when calculating their net worth to prevent customers from overextending themselves financially. This move was initiated as reports showed that customers tend to overestimate their financial capacity because of their crypto assets holding. However, despite the preventive measures, MAS admitted that crypto trading is still unavoidably speculative and risky. The deputy managing director at MAS, Ho Hern Shin, pointed out during a speech that it is noteworthy that while the new regulations can aid risks mitigation, they can’t possibly shield investors from the losses involved in crypto trading. According to the report, MAS came up with the new regulations in response to increasing concerns about the high risks and potential losses of funds customers face while trading crypto. It added that such high risk had been worsened by unverified celebrity endorsements, social media testimonies, and the general fear of missing out on investments with potential lucrative returns which persuade many customers into taking uninformed investment decisions.
MAS Launched Project Guidelines
Apart from the recent regulatory guidelines, the central bank of Singapore had been actively facilitating the growth and adoption of crypto assets among institutional investors. Earlier this month, the report showed that MAS introduced a Project Guardian scheme where it added five industry pilots to examine the effectiveness of various utility cases for digital asset tokenization. In addition, the new developments are predicted to boost crypto adoption in institutions, open more investment opportunities, increase the efficiency of economic markets as well as enhancing liquidity. Furthermore, there are about 17 financial organizations taking part in the proposed Project Guardian; only five institutions were chosen to execute the five pilots of the project, including Franklin Templeton, BNY Mellon, OCBC, Fidelity International, Citi, Ant Group, and T. Rowe price. Additionally, MAS has reportedly deployed Global Layer One designed to explore the structure of an open virtual facility that will accommodate digitalized financial assets.
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