Singapore to tighten retail access to cryptocurrencies

Singapore’s financial regulator has distanced itself from “heavily speculated” cryptocurrencies, after a series of scandals this year that damaged the city-state’s aspirations to be seen as a safe hub for the volatile asset class.

The Monetary Authority of Singapore’s managing director Ravi Menon on Monday said the agency would take stronger measures to restrict retail access to cryptocurrencies and consider “further measures to reduce consumer harm”.

However, he added that MAS still believed in the “transformative” economic potential of the broader digital asset ecosystem including tokenised digital versions of existing assets.

His comments come after Singapore faced accusations it had been sending mixed signals to the crypto market. The city-state has few natural resources and is more reliant on financial services. It wants a stake in the latest financial technology advances and last year began handing out licences to players in the crypto sector and allowing both retail and institutional trading of the asset class.

Investment in Singapore’s crypto and blockchain companies surged to a record $1.48bn in 2021, according to a report by KPMG, 10 times the previous year’s total and nearly half the Asia-Pacific total for 2021.

However, the city’s reputation as a safe hub has been dented as plummeting prices have exposed some of the industry’s biggest names who had based themselves in Singapore.

South Korean prosecutors are investigating the $40bn implosion of the terraUSD stablecoin, created by Singapore-based founder Do Kwon. The collapsed Three Arrows, one of the best-known crypto investors, was also based in Singapore, although registered in the British Virgin Islands.

Hodlnaut, a Singaporean crypto lender that received in principle licensing approval from MAS to offer token swaps in March, cut most of its workforce, stopped withdrawals and admitted to an investigation by the Singapore police this month. Hodlnaut had supported the luna cryptocurrency ecosystem on its platform.

Cryptocurrencies are not a “viable form of money or investment asset” due to their extreme price volatility, Menon said, while announcing that the regulator would further restrict retail investor access to digital currencies.

Some of the world’s biggest crypto exchanges, including Binance, Gemini, Coinbase and, all applied for licences to operate, attracted by the low taxes and perceived friendly regulatory environment. Some, including Binance, have since withdrawn their applications.

The regulator had already stepped up warnings and restricted crypto players from promoting services in public. Bitcoin ATMs have been dismantled and public transport advertisements removed.

Despite these warnings and measures, surveys showed that consumers were increasingly trading in cryptocurrencies, Menon said, and “MAS is therefore considering further measures to reduce consumer harm”.

These include creating suitability tests for customers and restricting the use of credit for trading. But outright bans would not work, he said, given Singaporeans could use their mobile phones to access exchanges anywhere in the world.

“[Are] investor restrictions appropriate when there are so many overseas platforms for trading crypto?” said Hoi Tak Leung, counsel at Ashurst, the law firm. 

The question is whether MAS’s new restrictions to protect consumers could be extended from more public facing methods such as advertising to include exchanges, licensees or others, he added. 


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