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Date: For Parliament Sitting on 5 March 2025
Name and Constituency of Member of Parliament
Mr Yip Hon Weng, MP, Yio Chu Kang SMC
Question
To ask the Prime Minister and Minister for Finance (a) what are the Government's key considerations in deciding to tighten regulations for digital payment token service providers, including the prohibition of payments via locally issued credit cards; and (b) what is the anticipated impact on younger consumers, particularly those aged 18 to 25, who are increasingly adopting the use of cryptocurrencies.
Answer by Mr Alvin Tan, Minister of State, Ministry of Trade and Industry and Ministry of Culture, Community and Youth, and Board member of MAS, on behalf of Mr Gan Kim Yong, Deputy Prime Minister and Minister for Trade and Industry, and Chairman of MAS:
1. Cryptocurrencies are highly volatile and speculative in nature, and are usually not anchored on any fundamental value. MAS has consistently issued public warnings that dealing in cryptocurrencies is highly risky and not suitable for the general public.
2. If an individual uses his credit card to purchase cryptocurrencies, he could be borrowing from the credit card, which attracts a higher rate of interest than other forms of credit. If the value of the cryptocurrency falls, he may suffer substantial losses and be unable to pay off his credit card debt, with the higher rate of interest compounding his debt.
3. More generally, using credit or leverage magnifies losses, and investors can lose more than the principal amount they put in. MAS has therefore prohibited digital payment token service providers from providing credit or leverage to all retail customers, regardless of age, for the purchase of cryptocurrencies. This includes restrictions on their acceptance of credit cards.
4. MAS cautions that regulatory measures cannot insulate consumers from losses associated with the inherently speculative and highly risky nature of cryptocurrencies. Consumers should stay clear of cryptocurrencies.
