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MAS launches consultation on allowing crypto derivatives trading on approved exchanges

Wed, 20 Nov 2019, 12:46 pm UTC

The Monetary Authority of Singapore (MAS) is seeking comments on proposed regulation of cryptocurrency derivatives on approved exchanges. The last date to submit comments is Dec. 20.

The MAS today published a consultation paper to allow derivatives on payment tokens, such as bitcoin and ether, to be traded on Approved Exchanges and to regulate the activity under the Securities and Futures Act (SFA).

“MAS does not intend to include, within the regulatory scope of the SFA, Payment Token Derivatives that are not offered by an Approved Exchange,” the paper clarifies.

There are currently four Approved Exchanges in Singapore: Asia Pacific Exchange Pte. Ltd., ICE Futures Singapore Pte. Ltd., Singapore Exchange Derivatives Trading Limited, and Singapore Exchange Securities Trading Limited.

Noting the growing international institutional investor interest in cryptocurrencies, the MAS underscored the need for a regulated product that will allow institutional investors 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,” it added.

However, the MAS advised retail investors against trading payment tokens and their derivatives as these exhibit high price volatility and they could lose the whole amount 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,” it added.

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