MAS Consults on Regulatory Approach for Payment Token Derivatives
MAS published a consultation paper on its regulatory approach under the Securities and Futures Act (SFA) for derivatives contracts that reference payment tokens as underlying assets (Payment Token Derivatives). To reflect the intended regulatory scope of Payment Token Derivatives under the SFA (discussed in Section 3 of the consultation paper), MAS is proposing to amend the Securities and Futures (Prescribed Underlying Thing) Regulations 2018. Annex B contains the text for amendments being proposed under the SFA. The consultation closes on December 20, 2019.
MAS has received queries from industry participants about whether Payment Token Derivatives, like those referencing Bitcoin and Ether, fall within the regulatory scope of SFA. MAS has also received indications of interest for Payment Token Derivatives regulated under the SFA to be made available to investors in Singapore. In calibrating the regulatory response, MAS intends to adopt a balanced view that seeks to allow innovation to co-exist in a regulatory environment with high standards. The consultation paper sets out the views of MAS on the appropriate regulatory approach for Payment Token Derivatives under the SFA.
The trading of the most popular digital tokens has largely been on unregulated markets. There has been interest from international institutional investors for a regulated alternative that could mitigate some of the concerns. Such regulated alternatives have recently emerged. In particular, Bitcoin futures have been listed and are traded on the U.S. futures exchanges. A well-regulated market for derivatives—particularly one anchored by institutional investors with sophisticated risk management and investment strategies—can serve as a more reliable reference of value for the underlying asset.
Comment Due Date: December 20, 2019
Keywords: Asia Pacific, Singapore, Banking, Securities, Payment Token Derivatives, SFA, Securities and Futures Regulation, Derivatives, MAS
Featured Experts

María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer

Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.

Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
DNB Responds to the Court of Audit Report on Resolution of BanksRelated Articles
EBA Proposes Standards for IRRBB Reporting Under Basel Framework
The European Banking Authority (EBA) proposed implementing technical standards on the interest rate risk in the banking book (IRRBB) reporting requirements, with the comment period ending on May 02, 2023.
FED Issues Further Details on Pilot Climate Scenario Analysis Exercise
The U.S. Federal Reserve Board (FED) set out details of the pilot climate scenario analysis exercise to be conducted among the six largest U.S. bank holding companies.
US Agencies Issue Several Regulatory and Reporting Updates
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
ECB Issues Multiple Reports and Regulatory Updates for Banks
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
CBIRC Revises Measures on Corporate Governance Supervision
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
HKMA Publications Address Sustainability Issues in Financial Sector
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
EBA Updates Address Basel and NPL Requirements for Banks
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.
ESMA Publishes 2022 ESEF XBRL Taxonomy and Conformance Suite
The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.