Singapore’s Central Bank to Permit Crypto Derivatives Trading

Asia Blockchain Review
November 29, 2019

The Monetary Authority of Singapore (MAS) has announced that the central bank is considering allowing derivatives trading of cryptocurrencies such as Bitcoin and Ether.

Legalizing Crypto Derivative Products

According to Finance Magnates, MAS has published a consultation paper detailing its plan to permit derivatives trading of crypto tokens on exchanges in Singapore. The report stated that the objective of this new plan is “for institutional investors to gain and hedge their exposure to the payment tokens.” 

Exchanges that will serve as the platform for these trades include the Singapore Exchange Derivatives (SGX), the Asia-Pacific Exchange (APEX), and ICE Future.

However, the cost of trading these crypto token derivatives will be higher than other products. MAS views crypto tokens as having “little to no intrinsic value” as well as “high price volatility.”

The consultation paper also stated that for this type of trading, “retail investors will need to pay 1.5x the standard amount of margin required for contracts offered by the approved exchanges, subject to a floor of 50 percent.”

Driving Blockchain and Crypto Projects

MAS has been promoting several blockchain and cryptocurrency-related projects, such as its joint project with Temasek and JP Morgan Chase & Co to develop a blockchain-powered multi-currency payments platform.

This initiative is the latest phase of Project Ubin, in which MAS has been collaborating with major companies to find use cases for blockchain. 

The payments network will reportedly offer new services such as escrow for trade, payment commitments for trade finance, and delivery-versus-payment (DvP) settlement with private exchanges.


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