Singapore’s central bank is planning to introduce new regulations that will make it harder for retail investors to trade cryptocurrencies.
Ravi Menon, managing director of the Monetary Authority of Singapore (MAS), said that tighter restrictions are needed because individual investors seem to be “irrationally oblivious” to the risks of trading digital coins and tokens.
The new rules might include customer suitability tests and restrictions on the use of leverage and credit facilities to buy and sell cryptocurrencies, according to Singapore’s central bank.
The new restrictions represent a reversal for Singapore, which had previously promoted cryptocurrencies and sought to attract digital firms from China, India and elsewhere in the last few years, making it a major cryptocurrency centre in Asia.
U.S. crypto exchanges Gemini and Huobi are among the companies with a major presence in Singapore.
But recent bankruptcies and defaults among cryptocurrency firms situated in Singapore, many of which are not subject to financial regulations or consumer protections, has triggered the move towards tighter regulations.
Singapore’s central bank plans to seek public feedback on its proposals between now and October, Menon said, and will introduce the new regulations by year’s end.
Cryptocurrency prices, including for Bitcoin (BTC), have plunged this year as interest rate increases and high inflation prompt investors to sell riskier assets.
About 180 cryptocurrency companies have applied for a payments licence in Singapore. However, to date, Singapore has issued only about 25 licenses.
