The Monetary Authority of Singapore (MAS) has issued the second and final segment of its responses to feedback on a consultation paper outlining proposed regulations for crypto services providers.
The central bank consisted in requiring crypto entities to discourage cryptocurrency speculation by retail customers by not providing financing, margin transactions or any incentives to trade, as stated Thursday. Furthermore, the MAS emphasised that crypto entities must not accept locally issued credit card payments and must determine a customer’s risk awareness before allowing them to access the services.
Singapore has been striving to strike a regulatory balance for the cryptocurrency industry and is seeking to simultaneously attract businesses in the sector. The announcement constitutes part of two responses to feedback on the proposed regulations for digital payment token (DPT) service providers in Singapore. The initial instalment (from July) required providers to deposit customer assets under a statutory trust before year-end for safeguarding.
“MAS has been very consistent about its stance against speculative retail trading, so it is unsurprising that they are largely moving ahead with their proposals,” said Angela Ang, a senior policy adviser for blockchain intelligence firm TRM Labs and a former MAS regulator. “That said, they’ve landed on slightly less restrictive measures in areas such as the inclusion of cryptocurrencies in determining customers’ net worth. This shows that MAS is listening, and is willing to consider industry feedback, even if they do not always agree.”
Among the less restrictive measures, MAS has eased the qualifications for becoming an accredited investor, specifying that certain crypto assets can be considered in meeting the S$2 million ($1.5 million) threshold. Additionally, the MAS has allowed exchanges to create their own criteria for listing tokens, provided that they disclose conflicts of interest, publish the governing criteria, and establish procedures for resolving customers’ disputes. This approach is less prescriptive than Hong Kong’s approach, which only allows tokens that meet the regulator’s criteria.
The MAS has also introduced reporting requirements for availability and risk incidents, aligning them with existing mandates for other systemically important financial institutions. The point is that these are not applied to payment service providers, making this a unique provision for the cryptocurrency sector.
The ruling will officially be effective in phases from mid-2024 to provide an “adequate transitional period” for implementation.
The MAS aims to limit potential consumer harm with these rules, as stated by Ho Hern Shin, deputy managing director for financial supervision.
“While these business conduct and consumer access measures can help meet this objective, they cannot insulate customers from losses associated with the inherently speculative and highly risky nature of cryptocurrency trading.”