Singapore’s Monetary Authority (MAS) stated it would require cryptocurrency exchanges to put customer funds in a trust. The authorities announced the measure in early July as they aim to ensure that funds are safeguarded. All of the above comes after the implosion of the FTX crypto exchange in November 2022.
Singapore also moves through “with a proposal to ban lending and staking for retail investors, the Monetary Authority of Singapore said in a statement on Monday.”[1]
It is important to note that lately, Singapore has been actively pursuing consultations to reinforce its regulatory regime for digital assets. As a result, “the country will require cryptocurrency exchanges to keep customer assets in a trust before the end of the year”[2]
Such public consultations on regulatory measures, which were held in October 2022 aim to enhance investor protection and market integrity in digital payment token (DPT) services. The regulator has also been proactive to receive feedback and comments, which as a result have shown some suggesting allowing DPT service providers to offer these activities with the retail customer’s consent and risk disclosures.
As mentioned before, Singapore is also likely to ban staking and lending for retail investors as the MAS stated that lending and staking activities are incompatible for the retail public. Furthermore the MAS believes that consumers must continue to trade in DPTs with the utmost prudence and accept responsibility for such trading, as they stated:
“Notwithstanding these regulatory measures, consumers must continue to exercise utmost caution when trading in DPTs and must take responsibility for such trading. Regulations cannot protect consumers from losses arising from the inherently speculative and highly risky nature of DPT trading” [3]
Furthermore, “under the proposed rules, firms must conduct daily reconciliation of customers’ assets, maintain proper records, and must maintain access and operational controls to customers’ DPTs in the region.”[4]
Although there would be a ban on staking and lending for retail investors, MAS proposed that DPT service providers may continue to provide such activities for their institutional and accredited investors.
Singapore, has for a long time, tried to strengthen crypto regulations while in the region, other locations, including Hong Kong, are meanwhile trying to persuade more individuals and organisations to participate in the sector.
At the end, according to MAS, it is anticipated that the measures are “expected to mitigate the risk of loss or misuse of customers’ assets and facilitate the recovery of customers’ assets in the event of a DPT service provider’s insolvency”[5]
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[1]https://sg.finance.yahoo.com/news/singapore-tells-crypto-platforms-to-keep-client-money-in-a-trust-092650453.html
[2] https://cryptodaily.co.uk/2023/07/mas-requires-crypto-platforms-to-store-client-money-in-a-trust
[3]https://www.mas.gov.sg/news/media-releases/2022/mas-proposes-measures-to-reduce-risks-to-consumers-from-cryptocurrency-trading-and-enhance-standards-of-stablecoin-related-activities
[4] https://cryptodaily.co.uk/2023/07/mas-requires-crypto-platforms-to-store-client-money-in-a-trust
[5]https://financefeeds.com/singapores-mas-bans-crypto-lending-and-staking-services-for-retail-customers/#:~:text=The%20Monetary%20Authority%20of%20Singapore,the%20end%20of%20the%20year.
