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Singapore Financial Authority Orders Crypto Companies to Keep Customer Assets in Trust
Singapore’s cryptocurrency sector is set to undergo significant changes as the Monetary Authority of Singapore (MAS) has introduced new measures requiring crypto companies to safeguard customer assets. The move comes as part of ongoing efforts to mitigate risks associated with virtual assets and to ensure the recovery of assets in the event of bankruptcy. According to an official announcement on July 3, the financial regulator revealed that crypto service providers would be required to deposit customer funds into a statutory trust by the end of this year.
The new rules aim to enhance investor protection and ensure the safe custody of cryptocurrencies within the country’s digital asset sector.
Ban on Staking and Lending Programs for Retail Investors
Under the new requirements, initiated following a public consultation held in October 2022, MAS has decided to move forward with its proposal to limit the involvement of digital asset providers in lending or staking activities for retail customers.
The consultation comes a few months after the MAS chairman, Tharman Shanmugaratnam, said in July that the authorities are considering implementing a series of rules to restrict retail participation in crypto trading and the use of leverage when transacting in crypto.
As a result of the October consultation, the financial watchdog has now banned crypto companies from offering such services to retail investors. However, the latest legislation is only subject to retail traders, as institutional and accredited investors will still have access to the offerings.
During the consultation process, the regulator received various opinions on the proposal. Some respondents suggested that crypto exchanges should be allowed to offer lending and staking services to retail customers, provided they obtain the customer’s consent and provide adequate risk disclosures. On the other hand, some respondents advocated for a complete ban on the activities, citing their speculative nature and potential risks.
The MAS’s decision to introduce these regulatory measures aligns with its goal of balancing protecting retail traders and fostering a favorable environment for institutional investors. The rules take into account industry feedback, including the practical challenges of requiring an independent custodian for customer assets.
Monetary Authority of Singapore Seeks Public Opinion on New Crypto Rules
To ensure the effective implementation of the new requirements, the financial regulator of Singapore has opened the draft legislative amendments to public feedback. This feedback will help shape the guidelines governing the country’s crypto sector and ensure consistent applications across all digital asset service providers.
The financial regulator remains open to monitoring market developments and consumer risk awareness and may consider revising its ban on lending and staking activities for retail customers.
Singapore Financial Authority Orders Crypto Companies to Keep Customer Assets in Trust
