MAS consults on regulatory approach for payment token derivatives

The Monetary Authority of Singapore (the “MAS”) issued a consultation paper (the “Consultation Paper”) on 20 November 2019 on the proposed regulatory approach under the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”) for derivatives contracts that reference payment tokens as underlying assets (“Payment Token Derivatives”). The consultation closes on 20 December 2019.

Notably, the Consultation Paper was followed shortly by ICE Futures Singapore Pte. Ltd. announcing its proposed launch of the Bakkt™ Bitcoin (USD) Cash Settled Monthly Futures contract on 9 December 2019.

In this client alert, we highlight the MAS’ key proposals to regulate Payment Token Derivatives that are traded on approved exchanges under the SFA and the additional safeguards the MAS has proposed to implement for retail investors who trade in Payment Token Derivatives, noting the distinction in approach taken by the MAS in Singapore, the Securities and Futures Commission in Hong Kong and the Financial Conduct Authority in the UK.