Bitcoin: Singapore Issues Fresh Warning On The Use Of Cryptocurrency

 

The Nation of Singapore on Tuesday issued a stern warning about the use cryptocurrencies.

This is coming after a recent surge in prices sent investors flocking to bitcoin, Agence France Presse, AFP, reports.

“The Monetary Authority of Singapore advises the public to act with extreme caution and understand the significant risks they take on if they choose to invest in cryptocurrencies,” the city-state’s central bank said in a statement.

“MAS is concerned that members of the public may be attracted to invest in cryptocurrencies, such as Bitcoin, due to the recent escalation in their prices.”

It said the recent spike in bitcoin prices comes from speculation, and cautioned that the bubble may burst.

Singapore’s central bank joins a number of regulators who have warned about cryptocurrency investments, including the US Federal Reserve, which said bitcoin could threaten financial stability.

Regulators in Seoul have banned South Korean financial institutions from dealing in virtual currencies.

The MAS, which also acts as a financial regulator in the city-state, noted that cryptocurrencies are not backed by any central bank and are unregulated, which means those who lose money after investing in them have no room for redress under Singapore law.

“There is also a risk of loss should the cryptocurrency intermediary be hacked, as it may not have sufficiently robust security features,” the regulator said.

Earlier on Tuesday, a South Korean virtual currency exchange declared itself bankrupt after being hacked for the second time in a year.

The closure comes eight months after nearly 4,000 bitcoin — then valued at 5.5 billion won ($5 million), nearly 40 percent of the exchange’s total assets — were stolen in a cyber-attack blamed on North Korea.

Global bitcoin prices have soared around 20-fold this year, with the cryptocurrency trading above $18,000 on Tuesday.

Created in 2009 as a piece of encrypted software, bitcoin been used to buy everything from beer to pizza, and is increasingly accepted by major companies such as online travel giant Expedia.

Analysts have put the surge down to growing acceptance among traditional investors and a decision by US regulators to allow bitcoin futures to trade on major exchanges.

Previously only traded on specialist platforms, bitcoin started trading on the Cboe Futures Exchange earlier this month before hitting the major Chicago Mercantile Exchange (CME) on Monday.