The Monetary Authority of Singapore (MAS), the city-state's de facto central bank, may soon allow cryptocurrency-based derivatives to be traded on regulated platforms.

The MAS published a consultation paper on Wednesday, seeking to green-light what it calls "payment token derivatives" for listing and trading on "approved exchanges" in the country under its Securities and Futures Act (SFA).

The proposal comes as a response to demand from international institutional investors for regulated products to be able to hedge their exposure to payment tokens such as bitcoin (BTC) and ether (ETH), the agency said.

Singapore now has four approved exchanges, namely, Asia Pacific Exchange, ICE Futures Singapore, Singapore Exchange Derivatives Trading and Singapore Exchange Securities Trading Limited, according to MAS.

Payment tokens such as bitcoin and ether are currently not categorized as an underlying assets for a derivative product under the oversight of the SFA. However, MAS said it has received requests to put such assets under its regulatory remit in order for them to be listed on approved venues.

The move comes just days after news report 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.

Meanwhile, MAS said such payment tokens derivatives are "not suitable for most retail investors" as they have "little or no intrinsic value" with high price volatility.

The consultation paper is open for feedback from interested parties until Dec. 20.