Singapore has always been seen as a hub of digital finance. Many of the world’s major blockchain and crypto conferences are held there and a lot of the region’s exchanges have chosen the island nation for its welcoming climes. This week the country’s chief financial regulator opened its digital doors even wider with further approvals for crypto derivatives trading.
Green Light For Crypto
Singapore’s equivalent of a central bank, the Monetary Authority of Singapore (MAS), plans to allow the trading of derivatives involving crypto assets on regulated platforms and exchanges. According to the Nikkei Asian Review, the move could pave the way for regulatory oversight as crypto products become increasingly popular among investors.
The MAS has proposed changes to Singapore’s Securities and Futures Act, which will apply to approved exchanges including the Singapore Exchange (SGX) and licensed intermediaries. The Authority added that it had received inquiries from industry participants keen to list and trade crypto-asset derivatives.
“The trading of the most popular digital tokens has largely been on unregulated markets… where there have been allegations of fictitious trades, cornering and market manipulation,”
In an effort to attract international institutional investors the MAS is keen to quash fears of market manipulation by regulating exchanges and allowing crypto trading in safer conditions.
There are a number of overseas exchanges based in Singapore and derivatives are offered by companies such as IG and Oanda. The list of companies seeking regulatory approval on the island nation is increasing as crypto-assets continue to grow in popularity there.
According to the MAS consultation paper;
“A well-regulated market for payment token derivatives, particularly one anchored by institutional investors with sophisticated risk management and investment strategies, can serve as a more reliable reference for the value of the underlying asset.”
The central bank added that trading crypto assets such as bitcoin and Ethereum directly should carry the associated risk warnings for investors. This form of direct involvement is not suitable for institutional investors it stated.
The MAS added that it will require approved exchanges and licensed intermediaries to impose higher margins for retail investors and that payment token derivatives not offered by approved exchanges will not come under the Securities and Futures Act.
There are currently three approved exchanges in Singapore; SGX, the Asia Pacific Exchange and ICE Futures Singapore.
There have been reports that the Intercontinental Exchange’s (ICE) Bakkt platform is planning to expand its existing bitcoin futures products to include cash-settled options. The new contract may be offered via ICE’s Singapore based clearinghouse, ICE Clear Singapore, and traded on the ICE Futures Singapore exchange.
With the latest MAS approvals, Singapore is angling to become the institutional investor’s choice in Asia.
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