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Risks of trading payment token derivatives

2 min. read

Find out what payment token derivatives are and what you should know if you plan to trade them.

Key takeaways
  • Payment token derivatives are highly risky products.
  • In general, the Monetary Authority of Singapore (MAS) does not view payment token derivatives to be suitable for most retail investors to trade.

What are digital tokens?

There are three main types of digital tokens:

  • Payment tokens,
  • Securities tokens, and
  • Utility tokens.

The most commonly known are payment tokens, which are used as a means of payment. Bitcoin, Ether, and Litecoin are examples of payment tokens. They are not legal tender.


Risks of trading payment tokens and their derivatives

Trading of payment tokens and their derivatives has largely been on unregulated markets, where there have been allegations of fictitious trades and market manipulation. If you trade unregulated products, you will not be protected by regulations administered by MAS.

Payment tokens and their derivatives are not suitable for most retail investors. These tokens tend to have little or no intrinsic value and are difficult to value. Their prices also tend to fluctuate very widely.

You are advised to exercise extreme caution if you want to trade payment token derivatives. You must be prepared to lose more than the amount you put in due to the leveraged nature of derivatives such as futures.



Protect yourself

Before making any investment decision:

  • Seek financial services from persons or entities that are regulated
  • Make sure you fully understand the benefits and risks of the product or service before committing
  • Assess whether the product or service meets your needs


  • Ask the seller as many questions as you need to understand the investment opportunity fully and the extent of losses that you have to bear particularly for leveraged products such as payment token derivatives
  • Check if the information provided by the seller on itself or its scheme is true
  • Review and consider all risk disclosures pertaining to the investment
  • Confirm, before investing, the seller's or its representative’s credentials by checking MAS' Financial Institutions Directory, Register of Representatives and Investor Alert List

(This article was updated on 1 April 2021) 


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Last updated on 03 Jul 2021