From customer reviews to risk alerts, Singapore brokerages take caution with US-listed Bitcoin ETFs

From customer reviews to risk alerts, Singapore brokerages take caution with US-listed Bitcoin ETFs

SINGAPORE: Given the “high” level of risks involved, some brokerages in Singapore are allowing only eligible investors who fulfil certain criteria to trade in the United States-listed spot Bitcoin exchange-traded funds (ETFs).

Risk alerts are also published on their websites prominently as additional safeguards.

Meanwhile, at least one brokerage – OCBC Securities – has decided not to offer the new cryptocurrency-linked funds to retail investors for now.

Earlier in January, the US Securities and Exchange Commission approved 11 ETFs that track the price of Bitcoin – a watershed move allowing mainstream investors to trade easily in the world’s largest cryptocurrency, through regular brokerage accounts and without needing to directly purchase these digital currencies.

These new ETFs are available for trading on some local trading platforms, although certain criteria apply.

For example, Interactive Brokers said “only eligible clients who have the requisite knowledge or experience to trade in listed specified investment products may apply for permission” to trade in the Bitcoin ETFs.

Specified investment products are financial products that have structures and features that may be more complex in nature. Brokers are required by the Monetary Authority of Singapore (MAS) to conduct suitability assessments before allowing their customers to trade in these products.

“Bitcoin ETFs are risky investments and clients wishing to trade such products must understand and acknowledge the associated risks involved,” said a spokesperson from Interactive Brokers.

Likewise, at Phillip Securities and DBS Vickers, only investors who comply with rules, such as passing a customer account review and completing a risk warning statement for overseas listed investment products, can go on to trade in the US-listed Bitcoin ETFs.

“As payment token derivatives such as Bitcoin ETFs carry a high level of risk, we have added another layer of safeguard to remind customers of the risks, including the risk of losing all their capital, high price volatility, cyber security risks (and) unregulated status of the products,” said Phillip Securities’ deputy head of global markets and ETF desk Jason Fu.

DBS has also put up a reminder on the login page of its trading platform to highlight potential risks, such as extreme price volatility.

“Customers intending to trade in overseas listed ETFs, including spot Bitcoin ETFs, are reminded of the risks associated and should carefully assess their investment objectives, risk appetite, financial situation and particular needs before making any investment decision,” said the bank’s spokesperson.