Monetary Authority of Singapore Cautions Against Crypto Investments

Announcements, News, Regulation | December 20, 2017 By:

The Monetary Authority of Singapore (MAS), the country’s central bank, has advised the public to act with extreme caution and understand the significant risks they take on if they choose to invest in cryptocurrencies.

The central bank said it is “concerned that members of the public may be attracted to invest in cryptocurrencies, such as bitcoin, due to the recent escalation in their prices.” MAS maintained that cryptocurrencies are not legal tender, and are not backed by any asset or issuer.

“MAS considers the recent surge in the prices of cryptocurrencies to be driven by speculation,” the central bank said. “The risk of a sharp reduction in prices is high. Investors in cryptocurrencies should be aware that they run the risk of losing all their capital. There is no regulatory safeguard for investments in cryptocurrencies. As in most jurisdictions, MAS does not regulate cryptocurrencies. Nor do MAS regulations extend to the safety and soundness of cryptocurrency intermediaries or the proper processing of cryptocurrency transactions.”

MAS added that it would be difficult to verify the operator’s credibility because most of them do not have a presence in Singapore. It also noted that cryptocurrency transactions are generally anonymous, which makes them vulnerable to being misused for unlawful activities. If a cryptocurrency operator is found to have used cryptocurrencies illegally, its operations could be shut down by law enforcement agencies. There is also a risk of loss should the cryptocurrency intermediary be hacked, as it may not have sufficiently robust security features.

“Members of the public who lose money from investing in cryptocurrencies will not be able to rely on any protection afforded under legislation administered by MAS,” the central bank said.

MAS advised that investors should carefully consider the claims being made about the products being offered – if the touted ease of making significant profits sounds too good to be true, it probably is. Investors should also carefully assess whether an investment in cryptocurrencies is suitable for their investment objectives and risk appetite.

In October, MAS managing director Ravi Menon said the central bank has no plans to regulate cryptocurrencies such as bitcoin, but will remain watchful on potential risks. He said that the central bank’s focus is to look at the activities surrounding the cryptocurrency and ask themselves what kinds of risks they pose, which risks would require a regulatory response, and then proceed from there.