Cryptocurrency companies in Singapore will soon be required to adhere to new guidelines proposed by the Monetary Authority of Singapore (MAS) to ensure the safety and protection of customer assets.
These guidelines, currently in the form of “draft legislative amendments,” are open for public comments and are expected to become formal legislation by the end of 2023.
With the proposed guidelines, MAS aims to introduce specific requirements for suppliers of digital payment token (DPT) services to mitigate the risk of loss or misuse of customers’ assets and facilitate asset recovery in the event of insolvency. The regulator emphasized the need for extreme caution while engaging in cryptocurrency trading, as customers face significant risks of losing their funds.
These guidelines include provisions for the independent management of custody services, daily reconciliation, accurate record-keeping by cryptocurrency platforms, and transparent risk disclosure to asset custody clients.
The introduction of these guidelines is part of MAS’s broader efforts to enhance consumer protection, build trust in the cryptocurrency industry, and create a more secure environment for customers’ assets.
The guidelines were formulated after a public hearing in October 2022, during which the Singaporean financial regulator considered various proposals for regulating the cryptocurrency sector.
Ultimately, the regulator decided to proceed with its initial proposal to prohibit cryptocurrency companies from offering lending and staking services to retail users. However, it permitted retail users to engage in “self-staking” and manage their own assets.
In response to concerns raised during the public hearing, MAS clarified that the prohibition primarily targets cryptocurrency platforms, preventing them from lending money to retail clients and offering staking services on their behalf.
To formalize these new requirements, MAS will amend the 2019 Payment Services Regulations and issue official guidelines. The public has until August 3, 2023, to submit comments on these proposed changes.
The MAS also announced that it would release responses to the feedback from the October 2022 consultation in multiple phases. According to the regulator, the first phase focuses on the rules for separating and protecting customers’ assets.
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