Singapore Central Bank Opens The Door For Crypto Derivatives Trading

The Singapore Central Bank was always considered as a hub of digital finance and many of the crypto conferences are held in the country as well as many companies moved their headquarters in the country. The exchanges in the region chose the island nation because of its welcoming climate and so today we are reading more about the new option for crypto derivatives trading in the altcoin news.

The Singapore Central Bank and the Monetary Authority of Singapore, aim to allow the derivatives trading involving crypto assets on regulated platforms and exchanges. According to the Nikkei Asian Review, this decision could only make way for a regulatory oversight as the crypto products become much more popular among the investors in the country.

The MAS proposed a lot of changes to the Singaporean Securities and Futures Act which will apply to the approved exchanges including the Singapore Exchange and the licensed intermediaries. The Authority also noted that it had received a few inquiries from the industry participants that aim to list and trade crypto-asset derivatives:

 “The trading of the most popular digital tokens has largely been on unregulated markets… where there have been allegations of fictitious trades, cornering and market manipulation.”

By trying to attract international institutional investors, the MAS is keen to shut down the fears of market manipulation by regulating the exchanges and allowing the crypto trading in safer conditions. There are also a lot of exchanges that are based in Singapore and the derivatives are offered by companies such as Oanda and IG. The list of companies that seek regulatory approval in Singapore is increasing along with the growth of crypto assets there. According to the MAS consultation paper:

 “A well-regulated market for payment token derivatives, particularly one anchored by institutional investors with sophisticated risk management and investment strategies, can serve as a more reliable reference for the value of the underlying asset.”

The Central Bank also noted that trading crypto assets such as Bitcoin and Ethereum will carry the associated risks for the investors and this form of direct involvement is not quite suitable for the institutional investors. The MAS also noted that it will require approved exchanges and licensed intermediaries to create higher margins for the retail investors and that payment token derivatives that are not offered by the approved exchanges will also not fall under the Securities and Futures Act.
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