MAS unveils stricter regulations targeting crypto speculation in Singapore

The regulations have been prepared after considering the feedback of various organisations, including digital payment token service providers

By Shashank Bhardwaj

Published: Nov 27, 2023 05:29:27 PM IST

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Singapore’s central bank, the Monetary Authority of Singapore (MAS), has announced new regulations to curb retail crypto speculation in Singapore. The regulations are set to take effect in mid-2024, targeting digital payment token (DPT) service providers, including crypto exchanges.

MAS has listed five consumer access measures for DPT service providers to implement to discourage crypto speculation by retail customers. First, DPT service providers must determine their customer’s risk awareness before providing them DPT services. Second, DPT providers must not offer their customers any incentives to trade in crypto.

Third, DPT service providers must not offer financing, margin or leveraged transactions. Fourth, they must refuse locally issued credit card payments to discourage speculation in crypto investments. Lastly, crypto holdings must not be considered while determining a customer’s net worth.

MAS also outlined some business conduct measures for DPT service providers to implement. These measures included - identifying, mitigating and disclosing potential and actual conflicts of interest; publishing policies, procedures and criteria that govern the listing of a DPT; and establishing effective policies to handle customer complaints and resolve disputes.

MAS requires DPT service providers to maintain highly available and recoverable critical systems in compliance with current requirements imposed on financial institutions.

In the announcement, Ms Ho Hern Shin, Deputy Managing Director (Financial Supervision), MAS, emphasised the obligations of DPT service providers towards safeguarding consumer interest.

He added, “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. We urge consumers to remain vigilant, exercise utmost caution when dealing in DPT services and not deal with unregulated entities, including those based overseas.”

The finalised measures come a year after MAS issued a consultation paper on its proposed DPT regulatory measures. The paper highlighted MAS’s vision to develop Singapore’s innovative and responsible digital asset ecosystem. It discouraged crypto trading and speculation owing to its risks and consumer harms.

The consultation paper was issued in October 2022, with the consultation period ending in December 2022. Respondents from various organisations, including industry associations, DPTSPs, financial institutions, professional services firms, and interested individuals, provided feedback on the proposed regulations.

MAS has taken a proactive approach to regulating the Singapore crypto industry in recent years. It announced its stablecoin regulatory framework in August this year, and a few days back, it announced its plans to conduct live trials of a wholesale central bank digital currency (CBDC).

Regulating the crypto sector is complex, and Singapore’s approach, assisted by MAS’ guidance, reflects a cautious yet forward-thinking stance.

The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash