Singapore Regulators Want to Protect Traders from Crypto Trading Risks

With the turmoil in the crypto markets, regulators all over the globe have become concerned about protecting investors from the risks associated with these digital currencies. The same is applicable in the case of the Monetary Authority of Singapore (MAS), which is now looking into protecting retail traders from the risks of the crypto market.

Tharman Shanmugaratnam, the head of the MAS, stated that they would now be developing new safeguards for consumers in order to ensure their protection when they make crypto investments.

Crypto restrictions

On Monday, the head of the Singaporean regulatory agency made the announcement in response to Murali Pillai, a lawmaker who had asked about the plans of the MAS in regard to the crypto market. He wanted to know what restrictions would be imposed on platforms that offer crypto trading services in the country. He urged the regulatory authority to implement protection measures for investors who have no experience and are planning on venturing into the crypto space.

Shanmugaratnam responded that the authority does not regard crypto assets as an ideal investment for retail traders because of the volatility associated with them. As a matter of fact, the minister made a reference to the recent chain of events that had unfolded in the crypto market. He stated that these had made the risky nature of cryptocurrencies quite evident. Since the beginning of the year, there are a lot of cryptocurrencies have shed their values significantly.

Turmoil in the crypto market

The cryptocurrency space has entered a bear market this year. Last month, Bitcoin and lots of other cryptocurrencies dropped to lows that had been last seen in 2020. It was widely asserted that the aggressive hike in the interest rates by the US Federal Reserve for taming inflation had contributed to the bear market.

Furthermore, investor confidence in cryptocurrencies also took a hit after the TerraUSD (UST) stablecoin and the LUNA token collapsed in May. Furthermore, there were a number of platforms that had been exposed to the stablecoin and the token and they are now dealing with liquidity problems. Crypto hedge fund Three Arrows Capital recently filed for bankruptcy and its exposure to UST and LUNA had contributed to its problems.

It is because of these events that the MAS and other regulatory agencies around the world have become concerned about the crypto space and its risks. The Singaporean authority wants to limit the exposure of retail traders in the market and it is also working on laws that would apply to leverage in crypto trading. But, the MAS added that these rules will only be effective if there is global cooperation.

Crypto regulations in Singapore

Earlier this year, the Monetary Authority of Singapore (MAS) introduced regulations relating to crypto ads. The regulator stated that some of the crypto ads do not warn the public about the risks associated with investments in the crypto space. Moreover, as per the recommendations of the Financial Action Task Force (FATF), the regulatory authority has also implemented anti-terrorism and anti-money laundering policies.