In a significant move, the Monetary Authority of Singapore (MAS), the country's de facto central bank and financial regulator, has proposed allowing cryptocurrency derivatives to be listed and traded on approved local exchanges.
Crypto Enters Singapore’s Financial Mainstream
The MAS released a consultation paper proposing that derivatives contracts linked to payment tokens—such as Bitcoin (BTC) and Ethereum (ETH)—be permitted for trading on approved exchanges. These activities would be regulated under the Securities and Futures Act.
The proposal was initiated in response to growing interest from institutional investors, including hedge funds and asset managers. If approved, payment token derivatives would become available on MAS-approved exchanges. Currently, there are four such exchanges: Asia Pacific Exchange, ICE Futures Singapore, Singapore Exchange Derivatives, and Singapore Exchange Securities Trading.
In its consultation paper, the MAS stated:
“A well-regulated derivatives market, particularly one anchored by institutional investors with mature risk management and investment strategies, can lead to a more reliable price discovery for the underlying assets.”
Singapore Joins the Global Competition
The integration of cryptocurrency into traditional financial markets is a growing global trend. The Chicago Mercantile Exchange (CME Group), a major U.S. derivatives exchange, has been offering Bitcoin futures since 2017. It currently averages nearly 7,000 futures contracts daily (equivalent to about 35,000 Bitcoin). CME also plans to introduce Bitcoin options contracts in the near future.
Bakkt, a subsidiary of the Intercontinental Exchange (ICE), is another institutional-grade derivatives platform in the U.S. It offers physically delivered Bitcoin futures contracts and is also expected to launch options soon.
Singapore, being a major global financial hub, stands to enhance Bitcoin’s broader adoption through this initiative. The MAS is seeking public feedback on its proposal until December 20.
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Why This Move Matters
The introduction of regulated crypto derivatives provides institutional investors with more tools to hedge risk and gain exposure to digital assets without holding them directly. It also brings more legitimacy and structure to the crypto market, aligning it with traditional finance practices.
This development may encourage more traditional financial institutions to participate in the crypto space, knowing that a respected regulator like the MAS is providing oversight.
Frequently Asked Questions
What are payment tokens?
Payment tokens refer to cryptocurrencies like Bitcoin and Ethereum that are primarily used as a medium of exchange. The MAS uses this term to distinguish them from security or utility tokens.
Who can trade these derivatives?
The proposal is aimed at institutional investors such as hedge funds, asset managers, and other professional entities. Retail investors may not have direct access initially.
Which exchanges are approved?
The four currently approved exchanges are Asia Pacific Exchange, ICE Futures Singapore, Singapore Exchange Derivatives, and Singapore Exchange Securities Trading.
How does this benefit the crypto market?
Regulated derivatives improve price discovery, increase liquidity, and reduce volatility. They also make it easier for large investors to enter the market.
Will this make Bitcoin more mainstream?
Yes. As more regulated products become available, institutional adoption is likely to increase, leading to greater mainstream acceptance.
What’s the deadline for public feedback?
The MAS is accepting comments on the proposal until December 20.