MAS to impose crypto trading suitability tests - Overreach?

The Monetary Authority of Singapore is looking to impose suitability tests on those wishing to trade cryptocurrencies. Those who do not meet the requirements will have restrictions placed on their credit facilities.

In certain jurisdictions across the world an adult is ‘allowed’ to drive a car, to bear a firearm, or to go into a casino and spend as much money as they like. It would be considered an infringement of their freedoms if these things were not ‘permitted’.

However, regulatory authorities around the world are suppressing and restricting the trading of cryptocurrencies. For once, retail investors have arrived before the waves of institutional wealth, and the authorities are alarmed in the extreme.

It is to be expected. Cryptocurrencies, should they survive and multiply, will mean an end to the monetary system that we know today, weighed down with masses of regulations, in spite of which, the banks still carry out nefarious activities.

In Singapore, things are no different. Although the MAS does realise that an outright ban would only probably lead to its circumnavigation by investors wanting to trade in crypto.

MAS Managing Director Ravi Menon said on Monday that the Singapore central bank was considering the imposition of restrictions. He stated:

"MAS regards cryptocurrencies as unsuitable for use as money and as highly hazardous for retail investors,"

He added:

“It is very risky for the public to put their monies in such cryptocurrencies, as the perceived valuation of these cryptocurrencies could plummet rapidly when sentiments shift. We have seen this happen repeatedly,”

Given that the public can only typically make returns of less than 1% in the existing financial system, and that the rate of inflation is skyrocketing across the world, and in some countries is exceeding 10%, it is not to be wondered that investors are looking to cryptocurrencies to try and make up the shortfall.

Of course, a lot of cryptocurrencies probably are hazardous for anyone to try and trade, but there are many that would say that Bitcoin, Ethereum, and certain other cryptocurrencies are innovating the future of money and other industry sectors.

To try and prevent retail investors from front-running the big institutions who will no doubt invest in this space as soon as they receive the regulatory green light, could be argued as a typical overreach of meddling authorities.

According to Menon, the MAS acknowledges the innovation that is coming out of the cryptocurrency sector and it sees the potential here. If this is the case, then why would this regulatory authority be trying to restrict retail investment into the sector?

Of course, all trading vehicles move down as well as up, and cryptocurrencies will do so even more given the small size of the sector in comparison to any other asset sector.

Truly free adults must be allowed to invest in cryptocurrencies without any restrictions. The authorities speak of ‘harm’ being done to them, but if they are permitted to enter a gambling establishment and lose everything they own, then why can they not trade without restrictions in an asset that is at a very early stage of its development, and which has so much upside potential?

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.