Singapore To Regulate Token Derivatives on Approved Exchanges Soon

Singapore To Regulate Token Derivatives on Approved Exchanges Soon

by November 22, 2019

The Monetary Authority of Singapore (MAS)  issued on 21st November 2019, a consultation paper proposing to allow payment token derivatives to be traded on Approved Exchanges and to regulate the activity under the Securities and Futures Act.

There is international institutional investor interest, for example from hedge funds and asset managers, in payment tokens such as Bitcoin and Ether.

These institutional investors have a need for a regulated product to gain and hedge their exposure to the payment tokens. MAS’ proposal will allow Approved Exchanges in Singapore to meet the need of investors to manage their exposure to payment tokens while bringing the activity under regulatory oversight.

In a statement issued by the Monetary Authority Singapore, it claimed that payment tokens and their derivatives are not suitable for most retail investors, it further added that these tokens tend to have little to no intrinsic value.

The regulator advised retail investors to exercise extreme caution when trading in payment tokens and their derivatives; adding that they could lose they whole amount they put in and more

MAS will require Approved Exchanges and licensed intermediaries to include risk warnings tailored to payment token derivatives in informational materials provided to investors. Additional margins will also be collected from retail investors to introduce more friction in the trading of leveraged payment token derivatives and partially mitigate the risk of losses.

The full consultation paper can be found here.


Featured image credit: MAS