The Blockchain Association has spoken out against this idea, calling it “overly restrictive.”
Individuals would be unable to get loans to fund the purchase of tokens if act is enacted.
The Central Bank of Singapore has previously advocated prohibiting crypto companies from lending their retail clients’ digital tokens. One of the most influential cryptocurrency advocacy groups in Singapore, the Blockchain Association, has spoken out against this idea, calling it “overly restrictive.” To them, the idea to outlaw all crypto companies from offering discounts to retailers was “too draconian.”
In a lengthy 11-page response to the Monetary Authority of Singapore in the latter half of December, the organization voiced concerns that allowing lending tokens would require merchants to get funding from unregulated crypto businesses.
Regulation Proposed Rather Than Restriction
To shield merchants from the volatility of the cryptocurrency market, Singapore proposed several additional measures. They also wanted to limit the ability of cryptocurrency companies to lend out or invest their coins in order to boost returns. If the legislation is enacted as proposed, individuals would be unable to get loans to fund the purchase of tokens.
Customers may obtain cash by lending tokens, according to the group. Cryptocurrency interest rates are an intriguing aspect of digital payment tokens.
Association members did reach a consensus, however, on the need for regulations capping the practice of people borrowing money from businesses in order to buy cryptocurrencies. It also advised that instead of eliminating incentives by retail enterprises it should be controlled. Gifts “not linked to financial purchases” are one possible use.
A Singaporean firm, Three Arrows Capital Hedge Fund, went bankrupt last year. When it failed, it was among the biggest hedge funds in existence. Afterward, the proposition was made. Subsequently, FTX failed, and severe concerns have been raised regarding how cryptocurrencies should be governed.