Singapore Blockchain Association Objects to Central Bank’s Proposal to Ban Crypto Lending as ‘Overly Restrictive,’ as reported by Bloomberg. In addition, the Blockchain Association of Singapore Warns Against Restrictive Crypto Lending Ban Could Drive Consumers to Unauthorized Offshore Companies.
The Monetary Authority of Singapore received feedback from 180 attendees at an association seminar held in November. While the association opposed the proposal to prohibit customers from borrowing to purchase cryptocurrency tokens, it concurred with the suggestion to separate customer assets from those of the company, as stated in the document.
In consultation papers released on October 26th, the central bank of Singapore suggested limiting the offering of “any credit facility” to customers by digital payment token providers, including both fiat currencies and cryptocurrencies.
As reported by Bloomberg, the failures of prominent cryptocurrency firms, including Three Arrows Capital and others in Singapore, prompted the Monetary Authority of Singapore (MAS) to release a consultation paper in October. The collapse of FTX also demonstrated the risks of inadequate regulation and protection for clients.
Stricter Rules & Unstable Crypto Market
The central bank of Singapore has proposed stricter regulations to safeguard retail investors in the volatile cryptocurrency market. However, the association believes that one of the advantages of owning digital payment tokens is the potential to earn interest through lending these tokens.
In response to Bloomberg’s comment, Chia Hock Lai, the chairman of the association’s board, said:
We are proposing a more measured and targeted approach, including doubling down on consumer education about the risks of dealing with unregulated entities and increasing enforcement activities on those who engage in regulated activities without them regulatory approvals required.
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Chia also claims that:
New regulations, which are intended to protect consumers, could have unintended consequences if implemented, such as driving consumers to use unregulated service providers.
The association opposed a complete ban on companies offering incentives to retail customers. Moreover, and suggested a more balanced approach that would allow non-financial perks like “door gifts during roadshows,” according to Bloomberg.