Singapore’s main crypto lobby group has pushed back on the central bank’s proposals to bar crypto firms from lending out retail customers’ digital tokens, saying such a measure is “overly restrictive.”
The Blockchain Association of Singapore said such a blanket ban could instead push people to seek out unregulated offshore firms to lend their tokens to, according to an 11-page feedback that was sent late last month to the Monetary Authority of Singapore and viewed by Bloomberg News.
The document disagreed on areas like offering retail incentives though agreed to suggestions such as barring customers from borrowing to buy crypto tokens and segregation of customer assets from the company’s own.
On the issue of lending tokens, the association said this allows customers to earn interest, which is one of the attractions of holding digital payment tokens. Singapore’s central bank has proposed a range of tighter measures to ringfence retail customers from the volatile cryptocurrency market, including restricting firms from lending or staking their coins to generate yields and stopping individuals from borrowing to fund token purchases.
“We are proposing a more measured and targeted approach, including doubling on educating consumers on the risks of dealing with unregulated entities and increasing enforcement activities on those engaging in regulated activities without the requisite regulatory approvals,” Chia Hock Lai, chairman of the association’s board, said in response to Bloomberg’s request for comment on the document.
The MAS’s consultation paper in October came in the wake of a series of high-profile crypto blow-ups in the city-state, including disgraced hedge fund Three Arrows Capital and platforms Vauld and Hodlnaut. Since then, the collapse of FTX and its entities have highlighted the risks of inadequate regulation and customer protection, as allegations of misconduct including comingling billions of dollars of customer funds came to light.
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“The proposed measures, while well-intended, might have unintended consequences if implemented in its entirety, including leading consumers to move towards unregulated service providers,” Chia said. The feedback to the MAS took into account comments from 180 people who attended a seminar the association conducted in November, according to the document.
The group also disagreed on imposing a complete ban on firms giving incentives to retail customers, calling the proposal “too draconian”. It suggested a more nuanced approach of allowing gifts that are not linked to financial purchases, such as door gifts at roadshows.
