Timeline and Guidelines for Regulation of Crypto Derivatives Exchanges

Mr Saktiandi Supaat asked the Prime Minister with the recent MAS consultation paper on the regulation of crypto derivatives for Approved Exchanges (a) whether MAS will establish a timeline for eventually imposing regulations on non-approved exchanges; and (b) whether MAS will issue guidelines to financial institutions offering crypto derivatives for retail investors and, if so, whether these guidelines will apply to crypto exchanges or other intermediaries.

Our basic consideration for crypto-derivative products is that they are not suitable for most retail investors because they do not have intrinsic value and are subject to sharp price swings driven by speculation.

Hence, MAS took a calibrated step to regulate crypto derivative products that are listed and traded only on Approved Exchanges, which are subject to regulatory requirements and supervisory oversight. But we do not extend the regulation of crypto-derivative products beyond Approved Exchanges. This would confer misplaced confidence in these highly volatile products, and lead to a wider offering of such products to retail investors. Our approach has worked so far as trading in crypto products in Singapore remains limited and only a small number of retail investors are involved.

Notwithstanding, MAS has issued circulars to all financial institutions to comply with additional measures if they offer crypto products to retail investors. These include requirements for warnings tailored to the risk of transacting in crypto products in informational materials provided to investors, restrictions on advertisement, and additional margins to be collected from retail investors to mitigate the risk of large losses from trading in volatile and leveraged products.

Investors should, however, be aware that these measures do not apply to entities which are not regulated by MAS. Many trading platforms operate online and are situated overseas. These are outside of MAS' regulatory oversight. Investors that trade on these platforms need to exercise caution and understand the risk of such products.

MAS has also issued advisories to warn members of the public of the risks of investing in crypto products. We will continue to work with the media to highlight these risks and to raise public awareness of potential scams.

International regulatory standards in the area of crypto products are still evolving. MAS is watching these developments closely and is participating actively in international regulatory discussions on how the risks posed by crypto products are best addressed.