Singapore: Regulations cannot protect consumers from losses in crypto markets, says MAS

THE Monetary Authority of Singapore (MAS) has called on consumers to “exercise utmost caution when trading in cryptocurrency” in its responses to queries about FTX and its operations here.

Currently, does not operate in Singapore, nor does it have the licence or exemption to operate here. But the regulator noted that it cannot prevent Singapore users from directly accessing overseas service providers.

“MAS has been continually reminding the general public since 2017 that dealing in cryptocurrency is highly hazardous,” said a MAS spokesperson.

On the question of whether “banning” Binance and placing it on the Investor Alert List (IAL) may have sent users into the arms of FTX, MAS clarified that Binance was not banned from operating in Singapore. Rather it did not have the proper licence to solicit customers from Singapore and had to stop doing so. The IAL is maintained for businesses that may be wrongly seen as being regulated by MAS.

“It would not be meaningful for MAS to list all unlicensed entities on the IAL. MAS did not have cause to list FTX on the same basis as Binance,” said the spokesperson.

As for why FTX did not migrate Singapore users to Quoine, the operator of the Liquid exchange in Singapore, MAS notes that both operate as separate entities. Quoine was acquired as part of the Liquid group acquisition by FTX in March 2022.

Singapore users have a choice to deal with FTX or Quoine, and the regulator did not require FTX to migrate Singapore users over. Quoine is currently exempt from licensing as its digital payment token (DPT) licence application is being reviewed. DPT licensees are regulated for money laundering and terrorism financing risks, and technology risks, but not for safety and soundness, highlighted MAS.

“They are not subject to risk-based capital or liquidity requirements, nor are they required to safeguard customer monies or digital tokens from insolvency risk,” said a MAS spokesperson.

There is an ongoing public consultation on measures to reduce consumer risks from cryptocurrency trading. This is set to close on Dec 21.

“Regulations cannot protect consumers from losses arising from the inherently speculative and highly risky nature of cryptocurrency trading,” said the spokesperson.