Cryptocurrency derivatives have garnered a lot of attention lately following the launch of Intercontinental Exchange’s Bakkt platform. Singapore seems to be boarding the hype train now after the Monetary Authority of Singapore [MAS] gave a thumbs up to “payment token” derivatives, in order to list as well as trade on regulated exchanges.
As per the official website of the financial watchdog, a consultation paper highlighting the approval and regulation of trading of derivatives on approved exchanges under the Securities and Futures Act [SFA] was issued earlier today. The MAS also pointed out the need for institutional investors to possess a regulated product, in order to acquire and hedge their exposure to currencies like Bitcoin and Ether. The announcement read,
“MAS’ proposal will allow Approved Exchanges in Singapore to meet the need of investors to manage their exposure to payment tokens while bringing the activity under regulatory oversight.”
In its paper, the MAS also cautioned retail investors about the same, suggesting that derivatives and cryptocurrencies weren’t “suitable” for retail investors.
The Monetary Authority of Singapore stressed on the need for approved exchanges to carry forward the trade of cryptocurrency derivatives. The financial authority also revealed that there were about four approved exchanges in the country, namely, Asia Pacific Exchange Pte. Ltd., ICE Futures Singapore Pte. Ltd., Singapore Exchange Derivatives Trading Limited, and Singapore Exchange Securities Trading Limited.
The announcement read,
“MAS will require Approved Exchanges and licensed intermediaries to include risk warnings tailored to payment token derivatives in informational materials provided to investors.”
The MAS also stated that payment token derivatives that aren’t a part of approved exchanges wouldn’t be included in the SFA’s regulatory purview.
Singapore seems to be taking a leap into the crypto-verse with its latest move, after it has already established its ground in blockchain technology. The MAS was recently in the news following its collaboration with banking firm, J.P.Morgan, to develop a blockchain-based prototype.