Heng Swee Keat warns retail investors to steer clear of crypto

SINGAPORE - Crypto-assets like cryptocurrencies and non-fungible tokens (NFTs) are constantly evolving and highly risky but have the potential to transform the future of finance, Deputy Prime Minister Heng Swee Keat said on Tuesday (May 31).

He warned that retail investors should steer clear of cryptocurrencies even as Singapore adapts its rules to address the key risks that crypto-assets pose.

"Retail investors especially should steer clear of cryptocurrencies. We cannot emphasise this enough," he said.

Mr Heng was speaking at the opening of the second Asia Tech x Singapore summit at The Ritz-Carlton Millenia Singapore hotel in Marina Bay, organised by the Infocomm Media Development Authority.

He noted that crypto assets have gathered much interest due to their phenomenal growth and promises of high returns and, more recently, the crash of Terra Luna, which caused many investors to suffer heavy losses and triggered knock-on effects on Bitcoin and other cryptocurrencies.

Nevertheless, Singapore will continue to adapt its rules to ensure that regulation remains facilitative of innovation, the minister said.

Mr Heng said crypto assets are part of a new wave of emerging digital technologies known loosely as Web 3.0 and the way to approach this is to keep an open mind.

"We must pierce through both the hubris and the veil of suspicion to understand the potentially transformative underlying technologies," he said. "Let us not throw out the baby with the bathwater."

This is because the digital asset ecosystem comprises an entire range of services beyond cryptocurrency trading.

"We remain keen to work with blockchain and digital asset players to encourage innovation, and build up trust in the sector," he added.

In the last two years, the Monetary Authority of Singapore (MAS) has granted licences and in-principle approvals to 11 digital payment token service providers, including stablecoin players like Paxos, crypto exchanges like Coinhako and traditional financial institutions like DBS Vickers.

At the same time, MAS has consistently warned the public against trading in cryptocurrencies and took steps to limit the promotion of cryptocurrencies to the general public earlier this year.

"We will continue to evaluate applications, and facilitate live experiments through regulatory sandboxes, to enable safe adoption in the financial sector," said Mr Heng.

He also announced the launch of Project Guardian, a collaborative effort by MAS to partner with the industry to explore the tokenisation of financial assets and develop the future of financial infrastructure.

The first industry pilot will be to explore potential decentralised finance applications in wholesale funding markets.

Said Mr Heng: "In short, we must approach emerging tech with an open mind, separating the hubris from its true underlying potential.

"Through regulation, we work constructively to realise the gains of these new technologies, and partner responsible and innovative players with strong risk management capabilities to build the foundations of the digital asset ecosystem."

This article was first published in The Straits Times. Permission required for reproduction.