The Monetary Authority of Singapore intends to prohibit leveraged and debt-financed crypto trading for individual investors.
In an attempt to safeguard consumers, the Singapore Monetary Authority (MAS) has suggested new restrictions for retail crypto investors, including a prohibition on trading using borrowed money.
The ideas are included in a consultation document produced by MAS in an effort to strengthen the country’s crypto regulatory system. The regulations are a response to the failure of a number of prominent cryptocurrency startups this year, including Three Arrows Capital and Celsius. Vauld, Zipmex, and Hodlnaut are among the others undergoing legal reorganization proceedings in Singapore.
The regulator advised individuals that trading with credit or leverage might result in losses that exceed the initial investment. It seeks to prohibit crypto service providers from providing debt-financed and leveraged crypto trading, such as credit card trading.
“For rules to support innovation in digital assets, they must be transparent and proportional to the dangers presented. Given the rapid speed of innovation, these restrictions should be frequently evaluated to assure their continued applicability.”
Other measures suggested by the SEC prohibit crypto service providers from providing retail clients incentives, such as free trading credits or tokens. This may include airdrops, the free distribution of tokens by a company to a subset of consumers. MAS is also aiming to prohibit crypto service providers from lending tokens to retail users.
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