Singapore MAS Imposes Regulations on Crypto Firms: An Examination

Singapore’s Monetary Authority of Singapore (MAS) has issued a new directive for crypto service providers.

Singapore MAS Imposes Regulations on Crypto Firms: An Examination

By the end of the year, these firms are required to deposit customer assets under a statutory trust for safekeeping. This move comes after the MAS sought public consultation on enhancing customer protection in October 2022.

The Aim of the New Regulation

The MAS’s new requirement aims to mitigate the risk of loss or misuse of customers’ assets. It also seeks to facilitate the recovery of customers’ assets in the event of a Digital Payment Token (DPT) service provider’s insolvency. This move underscores the MAS’s commitment to protecting customers in the rapidly evolving crypto market.

Restrictions on Lending and Staking of Tokens

In addition to the trust requirement, the MAS has also imposed restrictions on crypto service providers. They are now prohibited from facilitating the lending and staking of tokens by their retail customers. However, institutional and accredited investors can continue to avail of these services.

Public Feedback and Comparative Regulations

The MAS is also seeking public feedback on legislative amendments focused on implementing these new requirements. According to Angela Ang, Senior Policy Advisor for blockchain intelligence firm TRM Labs, Singapore’s requirements are similar to those of other payment service providers and are not as strict as Hong Kong’s rules.

The FTX Collapse: A Catalyst for Regulatory Change

The FTX collapse in November served as a wake-up call for regulators worldwide, highlighting the vulnerabilities in the existing regulatory framework for cryptocurrencies.

The financial difficulties faced by FTX resulted in substantial losses for its customers and underscored the urgent need for more robust safeguards and better investor protection measures in the crypto space.

In response to this incident, the MAS has implemented these regulatory changes to prevent similar occurrences in the future and to instill greater confidence in the industry.

Singapore’s Stance on Crypto Regulations

The MAS’s position on banning crypto entities from facilitating lending and staking of tokens for retail customers may change in the future.

Singapore’s commitment to supporting industry technologies to improve existing traditional financial systems aligns with its objective of being “brutal and unrelentingly hard” on bad behavior in the crypto industry.

About Singapore’s Mas

The Monetary Authority of Singapore (MAS) is Singapore’s central bank and integrated financial regulator. As a central bank, MAS promotes monetary stability and issues currency.

In addition, it works to foster innovation in finance, including the burgeoning field of fintech and digital currencies.