Singapore may soon require retail investors to take test before trading crypto, prohibit credit cards

In order to make citizens aware of the risks surrounding volatile assets, Singapore may soon require retail investors to take a test and not use credit card payments and other forms of borrowing.

Many retail customers may not have enough knowledge of the risks of trading digital payment token, which may lead them to take higher risks than they would otherwise have been willing, according to the Monetary Authority of Singapore.

The central bank thinks that firms licensed under the Payments Services Act should not be allowed to lend money to retail investors.

The central bank acknowledges that the regulatory treatment of retail customers' securities under the SFA38 may necessitate stricter measures for retail customers.

Several popular exchanges require their customers to sift through questionnaires before they are allowed to trade. The central bank acknowledged that a number of industry players are supportive of some form of assessment on the retail customer's knowledge of risks, but said they should also disclose whenever they have financial interests in the token they offer to customers.

The new guidelines, which are open to public consultation until December 21, propose that incentives should not be used to court retail customers. Celebrity endorsements would be banned.

Stablecoin

The central bank wants stablecoin issuers to give adequate disclosures about their token and hold reserve assets in cash, cash equivalent or debt securities that are at least equivalent to 100% of the par value of the outstanding token.

The central bank of the pegged currency or organizations that are both a governmental and international character with a credit rating of at least AA- should issue the debt securities.

The reserve assets of the issuers of the single-currency pegged stable coins must be independently audited on a monthly basis.

The proposal is a major change in Singapore's stance oncryptocurrencies. The collapse of a number of firms, including Terraform Labs and Three Arrows Capital, has made Singapore tougher on digital assets.

The central bank stated that the collapse of a number of cryptocurrencies trading platforms had led to significant consumer harm.