The financial supervisors of Singapore have proposed a ban on using credit or leverage while trading in cryptocurrencies. These restrictions would stop crypto firms from extending leverage or credit to retail customers. It would also prevent customers from accepting crypto payments through credit cards.
The Monetary Authority of Singapore has released new measures to lessen the risks of consumer harm and educate them on the dangers of cryptocurrencies and their related services. And the restrictions on using credit or leverage are also a part of these newly released measures.
In these measures, there are also suggestions about customers’ cryptocurrency payments safety, in which it said that providers should be forced to assess that a retail consumer has adequate knowledge of the risks of crypto-related services. These risks of crypto-related services are illiquid market conditions, technology failure, and cybersecurity, which the provider should know before providing any service to that customer.
In these restrictions, it is said that many retail customers may need to gain adequate knowledge of the risks of trading Digital Payment Tokens, which could prevent them from taking on higher risks. If consumers fail to display sufficient knowledge while being assessed, then its the duty of providers to educate them. The providers could give customers educational materials related to crypto to strengthen the customer’s knowledge of the risks of crypto services.
In the measures released by MAS, it is also said that providers should not mortgage, pledge, charge, or hypothecate the retail customer of crypto. And for institutional investors, service providers must provide a clear risk disclosure document and obtain the customer’s explicit consent before providing staking services.
Using credit or leverage while trading in cryptocurrency can entice retail customers to participate in DPT services without fully considering the risks involved. MAS banned it. These new rules from MAS will apply to all persons, whether existing customers or celebrities.
