The Monetary Authority of Singapore (MAS) has unveiled extensive regulations to protect retail crypto users from potential risks within the fast-growing industry.
In a statement on November 23, the financial regulator ordered Digital Payment Token (DPT) service providers within its jurisdiction to take specific measures to discourage retail customers from engaging in speculative crypto activities. These measures include denying credit card payments and eliminating incentives for crypto trading.
Furthermore, the MAS mandated these service providers to refrain from offering financing, margining or leveraged transactions. They must also assess their clients’ risk awareness level and limit the valuation of crypto assets when determining a client’s net worth.
In addition to these guidelines, the MAS has specified that DPTs must actively identify, mitigate and disclose potential or actual conflicts of interest within their activities. These providers are also required to publicly explain the policies, procedures and criteria for listing digital assets. Additionally, they must establish effective protocols for managing customer complaints and resolving disputes.
The regulator emphasized the need for DPT service providers to maintain robust and recoverable critical systems, in line with the stringent requirements imposed on financial institutions.
These newly introduced regulatory measures followed a period of soliciting feedback on proposals for digital payment token services that were initially released in October of the previous year. The rules will be gradually introduced from mid-2024.
Ho Hern Shin, MAS deputy director for financial supervision, noted that while these measures protect the interests of crypto consumers, “they cannot protect customers from losses related to the inherently speculative and highly risky nature of cryptocurrency trading. ”
Singapore has been actively strengthening its crypto regulations following the collapse of several crypto-related companies, including the impact of the failure of Terraform Labs’ algorithmic stablecoin on millions of its citizens.