Date
16 July 2018
Singapore's central bank has warned investors not to get carried away with the bitcoin frenzy. Photo: Bloomberg
Singapore's central bank has warned investors not to get carried away with the bitcoin frenzy. Photo: Bloomberg

Singapore MAS urges ‘extreme caution’ over cryptocurrencies

The Monetary Authority of Singapore (MAS) has urged investors to be extremely cautious about buying cryptocurrencies, joining financial regulators from other parts of world who have warned about a speculative bubble in units such as bitcoin.

In a statement issued Tuesday, Singapore’s de facto central bank said it is “concerned that members of the public may be attracted to invest in cryptocurrencies, such as bitcoin, due to the recent escalation in their prices”.

“MAS considers the recent surge in the prices of cryptocurrencies to be driven by speculation,” it said. “The risk of a sharp reduction in prices is high. Investors in cryptocurrencies should be aware that they run the risk of losing all their capital.”

Warning that there is no regulatory safeguard for investments in cryptocurrencies, the central bank urged the public to act with “extreme caution” and to understand the “significant risks” they take on if they invest in virtual currencies, Reuters reports.

The statement came after bitcoin prices surged more than twentyfold this year, hitting a fresh record high of US$19,666 on Sunday on the Luxembourg-based Bitstamp exchange.

“As most operators of platforms on which cryptocurrencies are traded do not have a presence in Singapore, it would be difficult to verify their authenticity or credibility. There is greater risk of fraud when investors deal with entities whose backgrounds and operations cannot be easily verified,” the MAS said.

With the statement, Singapore’s monetary authority became the latest financial regulator in the world to warn investors about the risks surrounding the extremely volatile cryptocurrencies. 

On Monday, Denmark’s central bank said bitcoin investing was “deadly”, warning the public to steer clear of it. It also said potential investors should not complain to financial regulators if things do go wrong.

European Union states and legislators agreed last week on stricter rules to prevent money laundering and terrorism financing on exchange platforms for bitcoin and other virtual currencies, but they have not moved to regulate the market beyond that.

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RC

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