Singapore’s central bank and financial regulator plans to allow the trading of derivatives involving bitcoin and other cryptocurrencies on select platforms, facilitating regulatory oversight as the demand for such products increases.

The proposed changes to Singapore’s Securities and Futures Act, which were outlined in a consultation paper, will apply to approved exchanges, including the Singapore Exchange (SGX), and licensed intermediaries, such as brokers, the Nikkei Asian Review reported.

The Monetary Authority of Singapore (MAS) said industry players are keen to list and trade cryptocurrency derivatives, which are also known in the city-state as payment token derivatives.

“The trading of the most popular digital tokens has largely been on unregulated markets… where there have been allegations of fictitious trades, cornering and market manipulation,” MAS said.

International institutional investors have expressed interest in “a regulated alternative that could mitigate some of these concerns,” MAS added.

Interest in cryptocurrencies has been steadily growing since they emerged about a decade ago and daily trading values are believed to be in the billions of dollars. Bitcoin, the first crypto to enter the market as well as the most prominent, has a market value of about $148 billion based on the number in circulation, according to coinmarketcap.com, a popular website for information about digital currencies.

Despite the high level of risk associated with investing in digital currencies – they are not backed by any government or central bank and are prone to extreme volatility – they have been immensely popular with investors. Their notorious volatility has fueled demand for leveraged products, or futures, based on the price of the underlying cryptocurrency. For instance, the Chicago Mercantile Exchange offers a bitcoin futures contract. Besides the CME, the Intercontinental Exchange also offers cryptocurrency futures. However, more mainstream players are getting involved, Nikkei Asian Review reported.

In Singapore, investors can trade cryptocurrencies on various overseas exchanges and through derivatives offered by companies such as IG and Oanda.

More cryptocurrency exchanges are seeking the approval of authorities to address investor concerns about the risks of trading on unregulated platforms.

Lawrence Loh, an associate professor at NUS Business School, said the authorities are paying more attention to cryptocurrencies given their popularity and as large companies like Facebook prepare to launch their own digital currencies. The regulations may, however, differ from country to country.

“Right now, we are still in a state of finding an equilibrium,” he said.

MAS said in its consultation paper that a well-regulated market for payment token derivatives, particularly one anchored by institutional investors with sophisticated risk management and investment strategies, can serve as a more reliable reference for the value of the underlying asset.

The move comes just days after the news that Bakkt, the bitcoin futures market launched by New York Stock Exchange owner ICE, is expanding its physically settled bitcoin futures product in Asia, making it available for trading on ICE Futures Singapore, Coindesk reported.

Singapore now has four approved exchanges: the Asia Pacific Exchange, ICE Futures Singapore, Singapore Exchange Derivatives Trading and Singapore Exchange Securities Trading Limited.