Singapore’s authorities propose to ban borrowing for the purchase of cryptocurrencies

Also, the country’s government intends to introduce strict requirements regarding the backing of stablecoins

26.10.2022 - 12:00

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What’s new? The Monetary Authority of Singapore (MAS) has proposed to ban retail investors from taking loans to buy cryptocurrency. The regulator could also prohibit companies from using customers’ crypto deposits for staking or lending. In addition, according to the Central Bank’s bill, all stablecoins need to be pegged to the local dollar or a Group of 10 currency and fully backed by reserve assets of the same denomination.

The Central Bank of Singapore’s bill

What else does the document say? It proposes a minimum capital requirement for stablecoin issuers, as well as an obligation to publish documents regarding the backing and the procedure for repurchasing assets. In turn, crypto service providers, such as exchanges, should separate customer funds from their own. It is also proposed to prohibit companies from conducting free token giveaways, i.e., airdrops, and handing out gifts in cryptocurrencies, as this could influence customers’ investment decisions. In addition, MAS opposed digital asset advertising featuring celebrities.

As for retail investors, the regulator intends to ban leveraged trading. Cryptocurrency prices are “highly volatile,” and leverage can lead to large losses for customers, MAS explained. It is worth noting that the restrictions do not apply to wealthy investors, who can qualify for a wider range of investments in the city-state.

Earlier, the Singapore High Court recognized NFTs as properties. The ruling was made during the proceedings in the case over the ownership of a token from the BAYC collection. The judge ruled that NFTs meet the legal requirements to be considered property.

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