Singapore may soon require retail investors to take a test and not use credit card payments and other forms of borrowing for trading cryptocurrencies, the central bank proposed on Wednesday in a series of stringent measures as the island nation looks to make citizens aware of the risks surrounding volatile assets.

The Monetary Authority of Singapore said in a set of consultation papers that it’s worried that many retail customers may “not have sufficient knowledge of the risks of trading” digital payment tokens, which may lead them “to take on higher risks than they would otherwise have been willing, or are able, to bear.”

The central bank also proposed that crypto firms licensed under the nation’s Payments Services Act should not be allowed to lend to retail investors in a move that could topple many firms’ businesses.

While “this latter option is stricter than the regulatory treatment of retail customers’ securities under the SFA38,” the central bank acknowledged, “MAS is of the view that the heightened risk of consumer harm in this unregulated space may necessitate stricter measures for retail customers.”

The new guidelines, which are open to public consultation until December 21, also proposes that crypto service providers should not use incentives such as giving away free tokens or other gifts to court retail customers. It also proposed banning celebrity endorsements.

The central bank has also proposed that stablecoin issuers make adequate disclosures about their tokens and hold reserve assets in cash, cash equivalent or debt securities that are “at least equivalent to 100% of the par value of the outstanding” tokens in circulation “at all times.”

The debt securities, the proposal says, should be issued by the central bank of the pegged currency or organizations that are both a governmental and international character with a credit rating of at least AA—.

“The collapse of a number of cryptocurrency trading platforms, where a few had conducted staking or lending activities, had led to significant consumer harm,” the central bank said.

Singapore may soon require retail investors to take test before trading crypto, prohibit credit cards by Manish Singh originally published on TechCrunch

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