Singapore banking regulator has issued yet another advisory note on investing in cryptocurrencies, reminding the public that these are not recognised as legal tender.
The Monetary Authority of Singapore (MAS) said any investment in cryptocurrencies such as Bitcoin, Ether, and Litecoin, should be done with “extreme caution” and understanding of the risks associated with it.
In a note released Tuesday, the industry regulator expressed its concern that consumers would be attracted to such investment due to recent surges in value, which it said were fuelled by speculation. Similarly, the risk of sharp declines in prices was high and investors should be prepared to lose their capital.
“MAS reminds the public that cryptocurrencies are not legal tender. They are not issued by any government and are not backed by any asset or issuer.
“There is no regulatory safeguard for investments in cryptocurrencies. As in most jurisdictions, MAS does not regulate cryptocurrencies. Nor do MAS regulations extend to the safety and soundness of cryptocurrency intermediaries or the proper processing of cryptocurrency transactions,” it said.
It noted that most operators of cryptocurrency exchanges did not have presence in Singapore and, as such, it would be difficult to ascertain their authenticity or credibility. It pointed to higher risks of fraud when investors transacted with entities, which track records and operations could not be easily verified.
MAS added that cryptocurrency transactions were typically anonymous, making them susceptible to abused and use in unlawful activities. Any organisation found to have used cryptocurrencies illegal would be shut down by enforcement agencies, it warned.
Cryptocurrency intermediaries that lacked robust security safeguards also could be hacked, resulting in losses for investors. It cited Bitcoin exchange Mt. Gox, which in February 2014 lost 850,000 Bitcoins–then valued at US$450 million–in a hacking incident
“Members of the public who lose money from investing in cryptocurrencies will not be able to rely on any protection afforded under legislation administered by MAS,” it said.
The Singapore regulator in 2014 said it would introduce legislations that required virtual currency intermediaries operating in the country to comply with measures to curb money laundering and terrorism funding. These included operators of exchanges and Bitcoin ATMs or vending machines.
These intermediaries, for instance, would need to verify the identities of their customers as well as report suspicious transactions to the authorities.
MAS in August 2017 also said it would step in to regulate the offer or use of digital tokens if these involved products regulated under the country’s Securities and Futures Act. The move was prompted by a spate of launches in which initial coin offerings (ICOs), or digital tokens, were tapped as a means of raising funds.
The first Bitcoin futures was launched earlier this month in New York on CBOE Global Markets’ CBOE Futures Exchange. It was followed by the world’s largest futures exchange CME, which introduced its Bitcion futures contract under the ticket BTC.