MAS Considering Bitcoin and Ethereum Derivatives Trading

According to the recently revealed information the Monetary Authority of Singapore (MAS) is allegedly looking into allowing cryptocurrency-based derivatives to be traded on regulated platforms within the city-state.

This development may seem to be related to the fact that the crypto trading on mainstream platforms has become more of a reality in the last few years as cryptocurrencies have made appearances on stock exchanges around the world and there is a constant push within the industry to get various digital assets approved for trading in many more markets. This is a response to the increasingly high demand for cryptocurrency and cryptocurrency-related products, even as the world begins to embrace its use both as an investment tool and as a medium of exchange. As the next phase of crypto maturity comes to fruition, we can expect to see even more of this.

This information comes via a consultation paper that was published by the Monetary Authority of Singapore this week in which they are considering “payment token derivatives” for listing on trading on certain approved platforms according to their country’s Securities and Futures Act.

This, apparently, is in response to demand by institutional investors who have stated in the past that they need tools with which to hedge their investment against traditional tokens such as Bitcoin and Ethereum. This is a growing sentiment within the business world as while many investors see the value in cryptocurrency and crypto-related assets, they are still wary of the often volatile crypto price. The four approved exchanges that exist within Singapore, according to the Singapore Financial Authority, are Asia Pacific Exchange, ICE Futures Singapore, Singapore Exchange Derivatives Trading and Singapore Exchange Securities Trading Limited. 

As of now, payment tokens such as Bitcoin cannot be used as underlying assets for derivative products according to the SFA. However, they have received a request to adjust this restriction and make it possible for such token derivatives to be traded on these platforms. Nevertheless, they might be seeing some level of competition as a few days ago, Bakkt, the Bitcoin futures market launched by New York Stock Exchange owner ICE, stated that they would be bringing their physically-held Bitcoin futures to the Asian market meaning it will be available for investors via ICE Futures Singapore.

However, the MAS has claimed that such physically-held token derivatives have no intrinsic value in high volatility and are of little benefit to retail investors. This new consultation paper, however, will be available for public feedback until December 20, 2019, and perhaps this newest development by Bakkt will swing the minds of regulators within Singapore.