Debated in Parliament on 5 Mar 2025.
Mr Yip Hon Weng asked the Prime Minister and Minister for Finance (a) what are the Government's key considerations in deciding to tighten regulations for digital payment token service providers, including the prohibition of payments via locally issued credit cards; and (b) what is the anticipated impact on younger consumers, particularly those aged 18 to 25, who are increasingly adopting the use of cryptocurrencies.
Sir, cryptocurrencies are highly volatile and speculative in nature and are usually not anchored on any fundamental value. The Monetary Authority of Singapore (MAS) has consistently issued public warnings that dealing in cryptocurrencies is hazardous, highly risky and not suitable for the general public.
If an individual uses his credit card to purchase cryptocurrencies, he could be borrowing from the credit card, which attracts a higher rate of interest than other forms of credit. If the value of the cryptocurrencies fall, he may suffer substantial losses and be unable to pay off his credit card debt, with the higher rate of interest compounding his debt.
More generally, using credit or leverage magnifies losses and investors can lose more than the principal amount they put in. MAS has therefore prohibited digital payment token service providers from providing credit or leverage to all retail customers, regardless of age, for the purchase of cryptocurrencies. This includes restrictions on their acceptance of credit cards.
MAS cautions that regulatory measures cannot insulate consumers from losses associated with the inherently speculative and highly risky nature of cryptocurrencies. Consumers should steer clear of cryptocurrencies.
Mr Yip Hon Weng.
Thank you, Mr Speaker. I thank the Minister of State for his reply. What is MAS' view on banning cryptocurrencies and will it lead to consumers going underground? And given that individuals aged 18 to 25 are increasingly adopting cryptocurrencies, what specific factors did the Ministry consider regarding this demographic when formulating these regulations? And how does the Ministry plan to address these unique financial literacy and risk exposure challenges faced by younger consumers?
Sir, I thank Mr Yip for his supplementary questions. I will start with the second one, and that is, the Government will continue to step up communications to warn consumers of all ages on the hazardous nature and the highly risky, volatile nature of cryptocurrencies. And that does not just apply to the youths, but it also applies to any consumer who deals with cryptocurrencies.
On the broader perspective of what MAS' views are on cryptocurrency, MAS seeks to foster an innovative and responsible digital asset ecosystem. But this is very different, and there is a sharp distinction that we need to draw between growing an innovative and responsible digital asset ecosystem, and the distinction between that and speculation in cryptocurrency, which MAS has consistently discouraged to the retail public.
With regard to the banning of cryptocurrencies, the Member would understand and realise that cryptocurrency trading and services are cross border in nature. And so, such a prohibition may be unlikely to be effective in limiting its harms. In fact, as the Member alluded to, imposing a prohibition could likely lead to some consumers turning to unlicensed cryptocurrency exchanges to access cryptocurrency services, where consumers might not be properly informed of the risks to make well-informed decisions. Therefore, to reduce the risk to consumers from speculative trading in cryptocurrencies, MAS requires that digital payment token service providers ensure proper business conduct and provide adequate risk disclosures.
In fact, these regulatory measures are comprehensive to reduce consumer harm in Singapore. They include consumer access provisions, business conduct provisions, as well as technology risk provisions. But our message is clear, it is consistent: consumers should steer clear of cryptocurrencies.
Assoc Prof James Lim, a short supplementary question to give the Minister of State time to answer.
Thank you, Speaker, for your indulgence. I had filed a crypto-related question yesterday about holdings by our Sovereign Wealth Funds (SWFs). I am wondering if I could follow-up a little little bit on that.
I fully agree with the Minister of State that for the retail investor, there are substantial risks. But I think there is an evolving understanding of the role of cryptocurrencies as a balancing asset, much like gold. And while I do not take any position about the utility of it in our SWF portfolios, I am wondering if MAS has a view about what it means for institutional investors, whether at the SWF level or institutional investors in the Singapore financial ecosystem.
Sir, I thank Assoc Prof James Lim for his question. I think that that question has been answered yesterday as a written Parliamentary Question, about that position. I also wanted to clarify with the Member what is his, and as well as the party's position, on cryptocurrency in general.
Assoc Prof Lim, do you want to respond?
Sure, I am happy to explain that for me, I do not hold any inherent favour or not. But I would like to understand what cryptocurrency means for institutional investors, much like how we draw a distinction between encouraging retail investors with a certain kinds of asset investments, as opposed to institutional investors.
Sir, the answer was quite clear yesterday that our investment entities make professional investments decisions to take long-term orientation. And so, they invest in assets that are anchored to underlying economic fundamentals with the potential for long-term value increase. Cryptocurrencies do not fit this profile.
Order. End of Question Time. Introduction of Government Bill.
[Pursuant to Standing Order No 22(3), provided that Members had not asked for questions standing in their names to be postponed to a later Sitting day or withdrawn, written answers to questions not reached by the end of Question Time are reproduced in the Appendix.]
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