Singapore evaluates more crypto safeguards after blowups

Singapore is considering new rules to protect consumers after plunging digital-asset prices triggered a series of high-profile crypto blowups, including firms based in the city-state.

The Monetary Authority of Singapore “has been carefully considering the introduction of additional consumer protection safeguards,” its Chairman Tharman Shanmugaratnam said in a written response to a question from parliament. “These may include placing limits on retail participation, and rules on the use of leverage when transacting in cryptocurrencies.”

The central bank has repeatedly said this year that cryptocurrencies aren’t for retail investors, as a US$2 trillion market selloff engulfed a growing list of players. Terraform Labs, whose TerraUSD stablecoin imploded in May, is based in Singapore, as was Three Arrows Capital, the crypto hedge fund ordered into liquidation last month after failing to repay creditors.

Frozen Withdrawals

Vauld, a Singapore-based crypto lender, on Monday said it froze withdrawals and hired advisers to pursue a potential restructuring after a surge in withdrawals sapped liquidity.

The MAS last week reprimanded Three Arrows for providing false information and exceeding the limit on assets under management. It’s continuing to investigate the fund for more rule breaches.

Authorities in the city-state have long maintained a wary embrace of crypto, granting just 14 firms the regulatory nod to provide digital token payment services locally, a fraction of almost 200 applicants.

Singapore has clamped down on crypto marketing and requires virtual asset providers to be licensed locally even if they only do business overseas.

The MAS’s Chief Fintech Officer Sopnendu Mohanty recently said the regulator is “brutal and unrelentingly hard” on any bad behavior in the crypto market.

But he has also commended major players in the industry like Binance and for efforts to create a responsible and compliant industry.

Governments across the world are increasing their scrutiny of the industry amid a major meltdown in crypto markets.

Bitcoin, the largest virtual token, has plunged about 56% this year, part of a broader retreat in riskier investments as tightening monetary policy drains liquidity from markets. It was trading at about $20,200 as of 11:08 a.m. on Tuesday in Singapore. –BLOOMBERG