In an effort to lessen the potential of consumer harm from the industry's volatility, Singapore's central bank has proposed additional regulatory restrictions on cryptocurrency trading and stablecoins.
Measures to prevent firms from lending out cryptocurrency owned by retail consumers and to guarantee that client assets are kept separate from their own assets were presented in two consultation papers on Wednesday.
Additionally, cryptocurrency trading companies would not be permitted to take credit card payments, offer incentives to draw in retail consumers, or finance such customers.
The Monetary Authority of Singapore (MAS) has said that it prevents the general public from engaging in speculative cryptocurrency trading and has already imposed limitations on the promotion of cryptocurrency services in public spaces.
Cryptocurrencies "play a supporting role in the broader digital asset ecosystem, and it would not be feasible to ban them," MAS stated in a media statement, adding that the suggested regulations should assist to decrease risks.
The MAS stated that it sought to guarantee that regulated stablecoins had a high degree of value stability in addition to tackling money laundering, terrorism funding, technology, and cyber threats.
Issuers of stablecoins pegged to a single currency (SCS) are required to hold reserve assets in cash, cash equivalents, or short-dated sovereign debt securities at least equal to 100% of the par value of the outstanding SCS in circulation if the value in circulation exceeds S$5 million ($3.53 million). Additionally, the assets must have the same monetary value as the pegged currency.
It stated that only the Singapore dollar or any other Group of Ten (G10) currency may be used to peg any SCS issued in Singapore.
According to the announcement, banks in Singapore would be able to issue SCS with no extra reserve backing or prudential requirements.
Only one stablecoin has so far been released in Singapore.
Major cryptocurrency companies like Binance had initially been drawn to the Asian financial center, but several of them went to the United Arab Emirates earlier this year, citing Singapore's tight regulatory restrictions.
The public has been asked to provide comments by December 21, however it is unclear when the suggested measures would be implemented.
By fLEXI tEAM