Pointing to retail cryptocurrency investors as being “irrationally oblivious” about the risks, the head of Singapore’s central bank is weighing new measures to restrict and discourage speculation in trading crypto.
“Many consumers are still enticed by the prospect of sharp price increases in cryptocurrencies. They seem to be irrationally oblivious about the risks of cryptocurrency trading,” Ravi Menon, managing director of the Monetary Authority of Singapore (MAS) said in a speech at the Green Shoots Seminar on Monday (Aug. 29).
He said it’s not just a problem in Singapore, but a “global phenomenon” that has the attention of regulators worldwide. He pointed to the collapse of Singapore-based Terraform Labs and Luna’s drop in value from over $100 to zero.
See also: Singapore-Based Crypto Lender Freezes Withdrawals as Stablecoin Contagion Grows
Crypto-related scandals and plummeting valuations have surrounded the crypto market in 2022. The Singapore-based crypto lending platform Hodlnaut froze withdrawals earlier this month, PYMNTS reported. Zipmex filed for bankruptcy in July, while Babel froze withdrawals in June. Most of the failed lenders had exposure to collapsed crypto hedge fund Three Arrows Capital, which was also based in Singapore.
Menon said MAS is going to continue to promote Singapore as a FinTech hub and attract leading crypto players to Singapore but will keep its “stringent and lengthy licensing process” in place. To discourage retail investing, he said the central bank is considering “adding frictions” on retail access. All measures are intended to reduce consumer harm.
“These may include customer suitability tests and restricting the use of leverage and credit facilities for cryptocurrency trading,” Meon said.
Read more: Three Arrows Bankruptcy Sale Offers Bleak Portrait of NFT Bubble
He added that MAS wasn’t going to ban the investments, as that is “not likely to work. The cryptocurrency world is borderless” and people can use their mobile phones to make trade anywhere.
“Consumers must take responsibility and exercise judgment and caution. No amount of MAS regulation, global cooperation, or industry safeguards will protect consumers from losses if their cryptocurrency holdings lose value,” he said.
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