Singapore’s Regulatory Watchdog Warns Against Crypto Investment

The Monetary Authority of Singapore (MAS) is the latest regulatory body to issue a warning to the public against the risks involved in cryptocurrency investment, as the crypto market is witnessing increased interest from retail and institutional investors amid the current bull cycle. 

Cryptocurrency Investment Risky for Retail Investors

According to BNN Bloomberg on Tuesday (April 6, 2021), the head of the MAS, Tharman Shanmugaratnam, gave the warning, while referring to the crypto market as volatile. The MAS chief also believed that the nature of cryptocurrency made it a risky venture for retail traders.

In Shanmgaratnam’s words:

“Cryptocurrencies can be highly volatile, as their value is typically not related to any economic fundamentals. They are hence highly risky as investment products, and certainly not suitable for retail investors.”

Shanmugaratnam’s warning comes amid the current boom in the crypto market. Bitcoin and other altcoins have seen their prices grow exponentially in the last one year, thereby attracting more investors to a growing industry. Bitcoin, the biggest crypto by market capitalization, has seen increased interest from retail and institutional investors looking to save their funds from inflation.

Meanwhile, the comments expressed by the MAS chief echoes similar sentiments by other government and regulatory bodies. Over the years, different regulatory watchdogs have warned retail consumers about the risks associated with crypto. Countries like the UK and South Africa have issued crypto warnings in recent times.

Consumer Protection a Priority for the MAS

While the MAS is wary about the cryptocurrency, the Singaporean regulator is, however, monitoring the industry. Currently, bitcoin and other crypto assets do not see significant use in Singapore. Although crypto trading is low in the city-state, the MAS is putting regulatory policies in place to ensure consumer protection.

“The crypto assets space is constantly evolving. MAS has been closely monitoring developments and will continue to adapt its rules as needed to ensure that regulation remains effective and commensurate with the risks posed. Investors, on their part, should exercise extreme caution when trading cryptocurrencies.”

Back in January 2020, the regulatory watchdog introduced the Payment Services Act (PSA) which would see crypto exchanges and token issuers come under the purview of the MAS. Later in January 2021, following the updated PSA, cryptocurrency providers in Singapore would be subject to the expanded rules and regulations by the MAS.

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