In response to the Singaporean government’s proposed ban on cryptocurrency exchanges lending out digital tokens to retail clients, the country’s leading crypto lobby group has argued that the proposal is “overly restrictive.”
The Blockchain Association of Singapore (BAS) has allegedly stated in a feedback document sent to the Monetary Authority of Singapore (MAS) that a blanket ban might force crypto users to explore leasing their tokens to unregulated offshore entities.
BAS also emphasized that one of the main reasons luring users to lending is the interest they receive, which the group thinks is one of the reasons why people hold cryptocurrencies. The central bank of Singapore recommended a ban on digital payment token service providers giving “any credit facility” to customers in consultation documents released on October 26. Both traditional currency lending and cryptocurrency lending fall under this category.
“The proposed measures, while well-intended, might have unintended consequences if implemented in its entirety, including leading consumers to move towards unregulated service providers,” Chia Hock Lai, chairman of the association’s board, said in a statement.
Furthermore, BAS claimed that an outright prohibition on firms offering incentives to retail consumers is “too draconian” and instead proposed a mechanism for permitting presents unrelated to monetary transactions.
“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,” the chairman explained.
Crypto sector in turmoil
The MAS consultation paper issued in October came after a string of crypto-related failures in the nation, such as those at the Three Arrows Capital (3AC) hedge fund, the Vauld cryptocurrency exchange, and the Hodlnaut cryptocurrency lending platform.
Last month, a hacker stole over $8 million from a Singapore-based crypto wallet service. Thousands of users reported that day that funds were stolen from their BitKeep wallets, while it is unclear how many Singaporean users were impacted.