Monetary Authority of Singapore, in a recent statement, has proposed green-lighting crypto-token derivatives to list and trade on approved domestic exchanges. The proposal suggests that derivatives trading be regulated under the Securities and Futures Act.
MAS to Regulate Derivatives Trading
The global race for crypto derivatives is accelerating as institutional investors are earnestly finding new ways to hedge their funds and make profits. Furthermore, Giant U.S. bourse operators CME Group Inc. and Intercontinental Exchange Inc. which are already in the business of offering cryptocurrency derivatives are all set to introduce other products in a few months. As a matter of fact, the CME platform will allow options trading from early 2020.
“MAS’s proposal will allow approved exchanges in Singapore to meet the need of investors to manage their exposure to payment tokens while bringing the activity under regulatory oversight,”
the regulator said in the statement.
Interestingly, Singapore Exchange Derivatives Trading Ltd., a local unit of Atlanta-based ICE, and Asia Pacific Exchange are among the MAS-approved venues. However, none of them currently list any crypto derivatives. While MAS has put forth its proposal to list derivatives, it is also following a cautious approach.
“Retail investors are strongly advised not to trade in payment token derivatives, and even if they choose to do so, should exercise utmost caution,” the regulator said in a consultation paper on the subject.
Derivatives Space Experiences Exponential Growth
Furthermore, ICE Futures Singapore aims to launch a cash-settled futures contract on Dec. 9. A few days back, Bitfinex announced that it is considering launching options trading in the first quarter of 2020. Another development in line for the exchange are Tether-based swaps. One of the primary reasons to launch Tether-based swaps is to build trust and a wider reach for Tether.
Also, Bakkt is all set to launch first regulated options contracts for Bitcoin futures on the 9th of December. The options contract will be based on the Bakkt Monthly Bitcoin Futures contract. The new contract has been designed as per customer feedback and has been designed to hedge or gain bitcoin exposure, generate income, and offer cost and capital efficiencies.
Will this new initiative lead to an increase in a number of derivatives traders? Let us know, what you think in the comments below!