Singapore’s central bank has proposed new rules for trading cryptocurrencies and stablecoins to protect consumers from the risk of harm caused by the volatile nature of the industry.
Two consultation papers were released on Wednesday. The measures include not letting businesses lend out cryptocurrencies that retail customers own and making sure that customer assets are kept separate from their own.
Businesses that trade in cryptocurrency wouldn’t be able to offer incentives to attract retail customers, accept credit card payments, or give retail customers financing.
The Monetary Authority of Singapore (MAS) has said that it doesn’t want people to trade cryptocurrencies on a speculative basis, and it has already made it harder to advertise cryptocurrency services in public places.
“…Cryptocurrencies play a supporting role in the larger digital asset ecosystem, and it would not be possible to ban them,” MAS said in a press release, adding that the proposed measures should help to reduce risks.
The MAS said that, in addition to addressing money laundering, funding for terrorism, technology, and cyber risks, it also wanted to make sure that regulated stablecoins had a high level of value stability.
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When the value of stablecoins that are tied to a single currency (SCS) exceeds S$5 million ($3.53 million), issuers must hold reserve assets in cash, cash equivalents, or short-term sovereign debt securities that are at least equal to 100% of the par value of the outstanding SCS in circulation. The assets must also be worth the same amount of money in the pegged currency as the assets.
It says that all SCS issued in Singapore can only be tied to the Singapore dollar or any other currency in the Group of Ten (G10).
The statement said that banks in Singapore will be able to issue SCS without having to hold more reserves or meet other prudential requirements.
Singapore has only given out one stablecoin so far.
Singapore’s Asian financial hub had initially attracted major crypto businesses like Binance, but some left the city-state earlier this year and moved to the United Arab Emirates, citing strict regulatory curbs in Singapore.
It is unclear when the proposed measures might be brought in, but the public has been invited to give feedback by December 21.
(1 Singapore dollar = 1.4160 Singapore dollars)
