Singapore Monetary Authority Warns Investors about Crypto Investment Risks

The last few months have led to the appearance of a trend, consisting of country financial regulators openly sharing their opinion on digital currencies, crypto-based investments, the future of the market and possible regulation efforts being undertaken.

Now, recent reports indicate that the Monetary Authority of Singapore (MAS), has urged investors to be highly-attentive of the possible risks associated with digital currency investments. Given the increase in popularity of the cryptocurrency market, the MAS now believes that the price increases were mostly driven by speculation, and that this may attract more investors. Apart from this aspect, the MAS also talked about how digital currencies can be used for illegal purposes, such as money laundering, or the financing of criminal activities, given their anonymity.

In a recent press statement made by the country’s financial regulator, it was mentioned that: “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.” 

Apart from this aspect, the regulator also talked about the fact that most digital currency exchanges are not based in Singapore, therefore verifying their authenticity would be fairly difficult given jurisdictional limits. The MAS also added that: “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. Before investing in cryptocurrencies, members of the public should carefully consider the claims being made about the products being offered - if the touted ease of making significant profits sounds too good to be true, it probably is.”

Many believe that these statements are a way for financial regulators to take responsibility off their shoulders, thus stating that investors should assume their risk, and only make crypto-related investment decisions that they would afford to lose.

At this time, the MAS has not made any additional statements on plans to regulate digital currencies, exchanges or their use in general.