For Singapore to lead as Asia’s cryptocurrency hub, robust regulations need to be minted.

While traditional trade exchanges operating in Singapore are subject to checks and balances, the unregulated state of cryptocurrency exchanges has left retail investors largely unprotected and exposed to a greater risk of fraud and loss. “I’ve been approached by individuals who are not paid what they’re owed, when exchanges claim the currency has been lost through hacking or that the trade was executed because of a (technical) error,” says Danny Ong, partner at Rajah & Tann Singapore.

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Citing the lack of compliance checks, with regard to trading processes and security systems underlying these platforms, the 43-year-old – who acted as lead counsel in Singapore’s first legal dispute involving cryptocurrencies – cautions that digital tokens are not recognised as legal tender in Singapore and transactions on unregulated exchanges fall outside the legislation administered by the Monetary Authority of Singapore. The onus then falls on the investor to exercise due diligence before dealing with these entities.

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As financial capitals in Asia race to establish themselves as the next cryptocurrency hub, governments – apart from those in Japan, and most recently Hong Kong – have been cautious in outlining regulatory frameworks for fear of driving businesses away. However, Ong believes that establishing the rules of engagement will do more good than harm. “A good regulatory system that’s not harsh, but solid and fair, would only increase the quality of real players. And with that, you become an attractive market and hub for investors.”

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PeakMonogram

This article is originally published on The Peak Singapore.

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