September 26, 2023

Singapore may allow cryptocurrency derivatives trading on regulated exchanges

Singapore Monetary Authority (MAS) may soon allow cryptocurrency derivatives trading on adjustable platforms.

On Wednesday, MAS published a background document inwhich proposes to allow listing and trading of “derivatives of payment tokens on approved exchanges” in accordance with the Securities and Futures Act (SFA).

The agency said that this proposal will becomeresponse to the demand for regulated products from international institutional investors, and will provide an opportunity to hedge risks when interacting with cryptocurrencies. There are currently four regulator-approved exchanges operating in Singapore: Asia Pacific Exchange, ICE Futures Singapore, Singapore Exchange Derivatives Trading, and Singapore Exchange Securities Trading Limited.

Payment tokens, as MAS calls them, for example,Bitcoin and ether are not classified as underlying assets for derivative products under the control of SFA. However, MAS claims to have received requests to include such assets in its regulatory authority for listing on regulated sites.

Last week Bakkt trading platformsaid it plans to expand its offerings and add settlement Bitcoin futures contracts, which will be offered through the company's clearing center in Singapore (ICE Clear Singapore), and trade on ICE Futures Singapore.

Meanwhile, MAS said similar derivatives“Not suitable for most retail investors,” because they have “low or zero intrinsic value” with high price volatility. The regulator accepts feedback and suggestions for amending the background document until December 20.