Singapore’s leading crypto group opposes proposed token lending ban

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(Bloomberg) — Singapore’s top crypto lobby group has pushed back against central bank proposals to ban crypto firms from lending digital tokens to retail customers, saying such a measure is too restrictive.

The Blockchain Association of Singapore said such a blanket ban could instead cause people to seek out unregulated offshore companies to lend their tokens to, according to an 11-page return that was sent to the Authority late last month. Singapore Currency and viewed by Bloomberg News. .

The document disagreed on areas like offering retail incentives, but agreed to suggestions like banning customers from borrowing to buy crypto tokens and segregating customer assets. of those of the company.

On the issue of lending tokens, the association said it allows customers to earn interest, which is one of the attractions of holding digital payment tokens. Singapore’s central bank has proposed a series of stricter measures to protect retail customers from the volatile cryptocurrency market, including preventing companies from lending or staking their coins to generate returns and preventing individuals from borrow to fund token purchases.

We are proposing a more measured and targeted approach, including doubling down on consumer education about the risks of dealing with unregulated entities and increasing enforcement activities on those who engage in regulated activities without them. regulatory approvals required, said Chia Hock Lai, chairman of the associations’ board. in response to Bloomberg’s request for comment on the document.

The MAS consultation paper in October came in the wake of a series of high-profile crypto blowouts in the city-state, including disgraced hedge fund Three Arrows Capital and platforms Vauld and Hodlnaut. Since then, the collapse of FTX and its entities has highlighted the risks of inadequate regulation and client protection, while allegations of misconduct, including the mixing of billions of dollars in client funds , were revealed.

The proposed measures, while well-intentioned, could have unintended consequences if implemented in full, including tricking consumers into switching to unregulated service providers, Chia said. Feedback to MAS took into account feedback from 180 people who attended a seminar organized by the association in November, according to the document.

The group also disagreed on imposing a complete ban on companies offering inducements to retail customers, calling the proposal too drastic. He suggested a more nuanced approach of allowing freebies that aren’t tied to financial purchases, such as door gifts during roadshows.

–With assistance from Andrea Tan.

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