Singapore’s regulator plans a ban on crypto trading with borrowed funds

Singapore’s Monetary Authority is attempting to outlaw debt-financed and leveraged crypto trading for ordinary traders.

To protect consumers, the Monetary Authority of Singapore (MAS) has suggested new rules for retail cryptocurrency investors, including a prohibition on trading with borrowed funds.

The recommendations are part of a consultation paper produced by MAS in order to tighten the country’s crypto regulatory regime even more.

The limitations come after a number of high-profile cryptocurrency firms, like Three Arrows Capital and Celsius, went bankrupt this year.

Several more, like Vauld, Zipmex, and Hodlnaut, are undergoing legal restructuring in Singapore.

The regulator advised consumers that trading with credit or leverage might result in losses that exceed the amount invested.

It seeks to prohibit cryptocurrency service providers from offering debt-financed and leveraged crypto trading, including credit card trading.

Other proposed measures by the SEC include prohibiting crypto service providers from offering retail clients incentives such as free trading credits or tokens. This might include airdrops, which are free token distributions by a company to a select group of users.

MAS is also considering prohibiting crypto service providers from lending out tokens issued to retail users.

It is unclear whether the new measure will have an effect on crypto yield-providing and staking services, because yields and staking rewards are frequently given by lending out customers’ crypto assets.

MAS also released a second consultation document on stablecoin regulation today, this time concentrating on “single-currency pegged stablecoins (SCS).”

It suggests that only stablecoins tied to the Singapore dollar or Group of Ten currencies be issued.

Issuers must also keep all reserve assets used to back the SCS in circulation distinct from their own assets in segregated accounts.