Singapore Further Solidifies Consumer Protection by Year-End
Singapore's crypto service providers must place customer assets into a statutory trust by year-end in another move to protect customers' interest.
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Singapore’s Monetary Authority of Singapore (MAS) has mandated crypto service providers to place customer assets into a statutory trust by the end of the year. This announcement, made on Monday, is part of a broader initiative to enhance customer protection to significantly reduce the risk of loss or misuse of customer assets in the city-state.
The MAS is also actively seeking public feedback on legislative amendments that would support the implementation of these new requirements.
Following a public consultation in October 2022, this measure will further aid in the recovery of these assets in the unfortunate event of a service provider’s insolvency. The MAS has imposed restrictions on cryptocurrency service providers, prohibiting offering lending and token staking services to retail customers. These services remain accessible to institutional and accredited investors, however:
“MAS reminds the public that regulations alone cannot protect consumers from all losses, given the extremely high risk and speculative nature of DPT [Digital Payment Tokens] trading […] While the segregation and custody requirements will minimise the risk of loss of customers’ assets, consumers may still face significant delays in recovering their assets in the event of insolvency of the service providers.”
In order to follow regulation, crypto service providers must segregate customer assets from the service provider’s own assets and hold them in trust, safeguard customer funds, conduct daily reconciliations of customer assets and maintain accurate bookkeeping. In addition, providers must maintain access and operational controls to customers’ DPTs within the country.
The MAS has also hinted at a possible change in its stance on prohibiting crypto entities from facilitating lending and token staking for retail customers in the future.
The MAS stated, “There were diverse views received on this proposal. Some respondents suggested to allow DPT service providers to offer these activities with the retail customer’s consent and risk disclosures, while others advocated a ban on these high risk and speculative activities.” The MAS will continue to monitor market trends and consumer risk awareness, adjusting its measures as necessary.