• By The Financial District

SINGAPORE WARNS INVESTORS ON GRAVE RISKS OF CRYPTOCURRENCIES

Singapore once again warned the public about the risks of trading cryptocurrencies like Bitcoin, a market that while relatively small in the city-state has surged in significance over the past year, Joanna Ossinger reported for Bloomberg News.

“Cryptocurrencies can be highly volatile, as their value is typically not related to any economic fundamentals,” Tharman Shanmugaratnam, the chairman of the Monetary Authority of Singapore (MAS), said in response to a parliamentary question on Monday.


“They are hence highly risky as investment products, and certainly not suitable for retail investors.”


He said that cryptocurrency funds are not authorized for sale to retail investors. The MAS also has powers to impose additional measures on digital token service providers, under which exchanges offering the trading of cryptocurrencies are regulated, as needed, according to Tharman, who is also senior minister and coordinating minister for social policies.


Economist Nouriel Roubini, chief executive officer of Roubini Macro Associates Inc., described cryptocurrencies as a “self-fulfilling bubble.”


Tharman’s comments come as the total market value of cryptocurrencies pushed past $2 trillion for the first time, doubling in about two months amid surging institutional demand. Bitcoin has been on a tear as investors dabble in crypto as a way to boost returns on cash in a world of near-zero interest rates, with the likes of Tesla Inc. saying last month it will accept its use as payment for cars.


Cryptocurrency trading in Singapore remains small compared to shares and bonds, with the combined peak daily trading volumes of Bitcoin, Ethereum, and XRP accounting for 2% of the average daily trading volume of securities on the main stock exchange last year, Tharman said.


While the likes of Elon Musk, Mark Cuban and Paul Tudor Jones have endorsed cryptocurrencies, Tharman isn’t the only regulator to express caution about an industry where fraud is still a concern.


A European Union watchdog recently warned of “significant” investor risks after Bitcoin’s gains, and Gary Gensler, the nominee to lead the Securities and Exchange Commission, said in his confirmation hearing that ensuring the crypto market is free of fraud is a challenge for the agency.



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