Monetary Authority of S'pore issues bitcoin warning

If you lose your money in cryptocurrencies, there is no redress under Singapore law.

Belmont Lay | December 19, 2017, 11:40 PM

Summary and background of Monetary Authority of Singapore media release:

The Monetary Authority of Singapore issued a statement on Dec. 19, 2017 addressing the recent spike in bitcoin prices.

It cautioned that the bubble may burst as its rise in price comes from speculation.

The MAS noted that cryptocurrencies are unregulated and not backed by any central bank.

Those who lose money after investing in them have no room for redress under Singapore law.

Other countries' regulators have also issued warnings

Regulators around the world have warned about cryptocurrency investments, including the US Federal Reserve.

A fall in prices overnight will threaten financial stability.

Regulators in Seoul have banned South Korean financial institutions from dealing in virtual currencies.

On Tuesday, Dec. 19, a South Korean virtual currency exchange declared itself bankrupt.

This is the second time in a year the exchange has been hacked.

Eight months ago, nearly 4,000 bitcoins then valued at 5.5 billion won (S$6.2 million) were stolen in a cyber-attack blamed on North Korea.

This represented nearly 40 percent of the exchange's total assets.

Global bitcoin prices have ballooned by 20 times this year, with the cryptocurrency trading above US$18,000 (S$24,276) on Tuesday.


Full MAS media statement:

1. The Monetary Authority of Singapore advises the public to act with extreme caution and understand the significant risks they take on if they choose to invest in cryptocurrencies. MAS is concerned that members of the public may be attracted to invest in cryptocurrencies, such as Bitcoin, due to the recent escalation in their prices.

2. MAS reminds the public that cryptocurrencies are not legal tender. They are not issued by any government and are not backed by any asset or issuer.

3. MAS considers the recent surge in the prices of cryptocurrencies to be driven by speculation. The risk of a sharp reduction in prices is high. Investors in cryptocurrencies should be aware that they run the risk of losing all their capital.

4. There is no regulatory safeguard for investments in cryptocurrencies. As in most jurisdictions, MAS does not regulate cryptocurrencies. Nor do MAS regulations extend to the safety and soundness of cryptocurrency intermediaries or the proper processing of cryptocurrency transactions.

5. As most operators of platforms on which cryptocurrencies are traded do not have a presence in Singapore, it would be difficult to verify their authenticity or credibility. There is greater risk of fraud when investors deal with entities whose backgrounds and operations cannot be easily verified.

6. Cryptocurrency transactions are generally anonymous, which makes them vulnerable to being misused for unlawful activities. If a cryptocurrency intermediary is found to have used cryptocurrencies illegally, its operations could be shut down by law enforcement agencies. There is also a risk of loss should the cryptocurrency intermediary be hacked, as it may not have sufficiently robust security features.

7. Members of the public who lose money from investing in cryptocurrencies will not be able to rely on any protection afforded under legislation administered by MAS. Before investing in cryptocurrencies, members of the public should carefully consider the claims being made about the products being offered – if the touted ease of making significant profits sounds too good to be true, it probably is. Investors should carefully assess whether an investment in cryptocurrencies is suitable for their investment objectives and risk appetite.

8. Members of the public who suspect that an investment involving cryptocurrencies could be fraudulent or misused for other unlawful activities, should report such cases to the Police.

9. For more information on cryptocurrencies and cryptocurrency investments, please refer to MoneySENSE’s consumer alerts.

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