Investors should exercise extreme caution when trading cryptocurrencies, senior minister Tharman Shanmugaratnam said in parliament on Monday.
Cryptocurrencies can be highly volatile, as their value is typically not related to any economic fundamentals. They are hence highly risky as investment products, and certainly not suitable for retail investors,» Shanmugaratnam, who is also the minister in charge of the Monetary Authority of Singapore (MAS).
His comments come as cryptocurrency-related scams are on the rise in the republic, as investor interest in the space grows with soaring crypto prices.
However, according to MAS, the size of Singapore’s cryptocurrency market remains small. The combined peak daily trading volumes of bitcoin, ethereum, and XRP was 2 percent of the average daily trading volume of securities on the Singapore Exchange (SGX) in 2020.
Cryptocurrency derivatives traded through financial institutions likewise amounted to less than 1 percent of the derivatives trading activity on SGX. Cryptocurrencies comprise less than 0.01 percent of the assets in funds managed by MAS-regulated fund managers, Shanmugaratnam said.
The parliamentary discussion comes as more than 100 people have filed police reports against crypto trading platform Torque, run by Singapore businessman Bernard Ong. The platform suspended more than 14,000 accounts across 120 countries in January, with investor claims are estimated at $325 million.
Ong alleges of his employees had violated the company’s rules and that his unauthorized trading activities had led to significant losses. Some 2,000 Singaporeans are estimated to have invested in crypto on the platform, which is registered in the British Virgin Islands.