In a parliamentary hearing on January 6, 2020, lawmakers questioned whether the Monetary Authority of Singapore (MAS) would establish a timeline to regulate unapproved exchanges and issue industry guidelines for financial institutions offering crypto asset derivatives. The inquiry also addressed whether such guidelines would apply to crypto exchanges or other intermediaries. Deputy Prime Minister and MAS Chairman Tharman Shanmugaratnam provided the following response:
Key Regulatory Stance on Crypto Derivatives
MAS maintains that crypto asset derivatives are unsuitable for most retail investors due to their lack of intrinsic value and extreme price volatility driven by speculation.
To mitigate risks, MAS adopts a prudential approach:
- Regulates only derivatives listed on approved exchanges.
Deliberately avoids extending oversight to unapproved platforms to prevent:
- False investor confidence in highly volatile products.
- Proliferation of institutional offerings targeting retail traders.
This strategy has proven effective, with limited crypto trading activity in Singapore and minimal retail participation.
Current Measures for Regulated Entities
MAS mandates all financial institutions to:
- Disclose risks associated with crypto derivatives.
- Restrict advertising to avoid misleading promotions.
- Collect higher margins from retail investors to curb losses from leveraged trading.
⚠️ Critical Note: These rules do not apply to:
- Unregulated platforms (often overseas-based).
- Decentralized or offshore exchanges beyond MAS jurisdiction.
Investors must exercise caution and self-educate on risks when using such platforms.
Ongoing Efforts and International Collaboration
MAS emphasizes:
- Public awareness campaigns via media to highlight investment risks and scams.
- Active involvement in global discussions to shape crypto regulatory standards.
👉 Explore secure crypto investment practices
FAQ
Q: Can retail investors trade crypto derivatives in Singapore?
A: Yes, but only through MAS-approved exchanges with strict risk disclosures.
Q: Why doesn’t MAS regulate all crypto platforms?
A: Over-regulation may inadvertently legitimize high-risk products. MAS prioritizes investor education and targeted oversight.
Q: How can investors identify risky crypto derivatives?
A: Watch for excessive leverage promises, unclear pricing mechanisms, or platforms lacking MAS authorization.
Q: Is MAS planning tighter crypto rules soon?
A: While monitoring global trends, MAS maintains its balanced approach unless new systemic risks emerge.
Q: Are crypto derivatives illegal in Singapore?
A: No, but they’re restricted to protect retail investors from disproportionate losses.