The central bank of Singapore is preparing to tighten its grip over crypto trading in the retail sector. According to the authorities, the use of digital currencies by retail investors can pose challenges, and they even call it unsuitable money. While briefing on their new initiative, the Monetary Authority of Singapore revealed plans to regulate cryptocurrency to safeguard investors.
Per reports central bank intends to minimize the risk consumers are exposed to when using the volatile currency for transactions. The legislation came into light with the publication of two consultation papers which stated that businesses would be restricted from lending out cryptocurrency owned by the customers.
The firms which own crypto trading organizations can’t allure customers by spreading the word regarding accepting credit card payments. Besides trading, the authorities strictly prohibit promotional activities surrounding cryptocurrency services. In the green Shoots Seminar, Ravi Menon, the managing director at MAS (Monetary Authority of Singapore), discussed the five significant risks digital assets might face.
He said they are initiating steps to combat rising incidents of money laundering and terrorist financing. The world has already witnessed the use of crypto in illegal activities, and the volatility of digital assets makes it even riskier. According to the central bank of Singapore, crypto assets don’t fulfil three characteristics of money: a unit of account, medium of exchange and store of value.
Alongside regulating crypto use in the retail sector, the central bank of Singapore is working towards ensuring stablecoins retain their stability. The stablecoins must be pegged to the Singapore dollar to any G10 currency; otherwise, they won’t be accepted as a mode of exchange.
With the growing cases of illegal use of digital assets by cybercriminals, the authorities find the regulatory practices necessary to help the country effectively manage the crypto industry’s risks.