Singapore’s Central Bank had earlier proposed imposing a ban on lending digital tokens of retail customers by crypto firms. The Blockchain Association of Singapore, a main crypto lobby group has opposed this proposal claiming it to be “overly restrictive.” They also disagreed about the proposal of a complete ban on crypto firms extending incentives to the retailer and called it “too draconian.”
About lending tokens, they argued that such decision will force the retailers to get funds from the crypto firms that are unregulated, as stated in the 11-page long feedback submitted by the group to the Monetary Authority of Singapore, in the later stages of December.
The Blockchain Association of Singapore’s disagreement
Singapore came up with many more proposals to protect retailers from the unpredictable crypto market. They also called for the restriction of crypto firms in lending or putting their coins to increase yield. Individuals won’t be able to take loans for purchasing tokens if the law passes. However, the association, stated that lending tokens can get money for customers. The interesting part about digital payment tokens is the interest rates on them.
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The association, however, agreed that there should be certain restrictions on individuals lending money from firms to purchase cryptocurrency. It also suggested that instead of banning incentives by retail firms it should be regulated. It can be shaped to giving “gifts that are not linked to financial purchases.”
Chia Hock Lai, the chairman of the association said,
“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,”
while speaking with Bloomberg.
“The proposed measures, while well-intended, might have unintended consequences if implemented in its entirety, including leading consumers to move towards unregulated service providers,”
added Lai.
What led to proposing such regulations?
Last year Singapore saw its city-state company The Three Arrows Hedge fund collapse. It was one of the largest hedge funds to go under. The proposal came following this. Later FTX collapsed and there have been serious questions raised about the regulations of cryptocurrencies.
Also read: US SEC Targets FTX Investors, Questions Their Due Diligence
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