Cryptocurrency Investors Might Lose All Their Capital, MAS Warns

The Monetary Authority of Singapore (MAS) has urged local investors to “act with extreme caution” when trading cryptocurrencies, especially Bitcoin. The warning comes amid the recent surge in Bitcoin’s price, which has more than doubled in less than a month.

Singapore’s central bank and financial regulator issued the warning in a press release on December 19. In nine numbered paragraphs, the MAS reiterated its views on different aspects of the cryptocurrency market.

One section, for instance, restates the central bank’s position that cryptocurrencies do not represent legal tender, are not issued by any government, and are not backed by Singapore dollars or any other assets.

The MAS also made sure to remind investors that it is not responsible for guaranteeing the safety of the cryptocurrency space within Singaporean borders as it does not regulate this market yet. Besides, the authority cannot ensure the safety of crypto exchange and intermediaries because most of them are based outside Singapore. The central bank said there is higher fraud risk when people operate with crypto exchanges and intermediaries that cannot be verified.

According to the MAS, the current price jump in cryptocurrencies like Bitcoin is supported by speculation. There is a significant risk that prices might collapse and that investors can lose all their capital.

The release also mentioned the danger of potential hacks and the link between the anonymity of cryptocurrency transactions and the risks of illegal operations:

“Cryptocurrency transactions are generally anonymous, which makes them vulnerable to being misused for unlawful activities. If a cryptocurrency intermediary is found to have used cryptocurrencies illegally, its operations could be shut down by law enforcement agencies. There is also a risk of loss should the cryptocurrency intermediary be hacked, as it may not have sufficiently robust security features.”

At the beginning of October, the MAS unveiled plans to introduce new regulations to fight money laundering through cryptocurrencies.

Despite being quite severe when it comes to Bitcoin, the MAS is very open to the technology behind it. It has encouraged blockchain and fintech projects on many occasions.