The Monetary Authority of Singapore (MAS) has released new crypto regulation proposals after a series of collapses and recent court rulings on the legislative front. The regulatory agency recognizes the benefits of crypto, but wants to protect retail investors from losses as much as possible.
The proposals were released in two consultation papers on Wednesday, outlining rules for crypto trading by retail investors in order to safeguard them. Ho Hern Shin, Deputy Managing Director at MAS, said that The two sets of proposed measures mark the next milestone in enhancing Singapore’s regulatory approach to foster an innovative and responsible digital asset ecosystem. Regulations go hand-in-hand with innovation in financial services.
Singapore has new plans on crypto regulation
A significant change in the new rules is keeping a check on consumer access by barring credit facilities from providing services to retail consumers for cryptocurrency trading. Also digital payment token (DPT) service providers will need to ensure adequate asset segregation for their clients, reduce any potential conflicts of interest brought on by their various roles, and develop procedures for managing complaints.
All DPT service providers will further need to take steps to reduce technological risks related to the “availability and recoverability” of their critical systems. The new crypto regulations will be added to the Payment Services Act that guides Singapore’s domestic crypto sector.
The Monetary Authority of Singapore (MAS) today published two consultation papers proposing regulatory measures to reduce the risk of consumer harm from cryptocurrency trading and to support the development of stablecoins as a credible medium of exchange. https://t.co/DmeJKy3w5s
— Wu Blockchain (@WuBlockchain) October 26, 2022
Stablecoins as an accepted trading currency
MAS has laid out risk disclosure requirements for crypto providers while acknowledging the benefits of the asset class. It noted additionally that regulations in most cases cannot protect consumers from losses arising from the speculative and highly risky nature of DPT trading.
Meanwhile, MAS promises to permit stablecoin development as a reliable means of exchange despite the LUNA crisis shaking the crypto market. The regulator noted they will regulate the issuance of stablecoins. This also includes the ones that are pegged to a single currency (SCS) where the value of SCS in circulation exceeds $5 million. Notably, holding reserve assets in cash, cash equivalents, or short-dated sovereign debt securities is required for all SCS issuers based on the nation’s crypto regulation.
Race for ultimate crypto hub
Earlier this month, the watchdog granted a license to Nasdaq-listed crypto exchange, Coinbase, to operate in the country. The exchange joined a group of about 15 companies authorized to provide services for digital assets in the crypto-friendly nation, including Crypto.com. However, after several liquidation orders following high-value collapses of crypto businesses, including Three Arrows Capital (3AC), the country is taking strict regulatory measures.
On Oct. 18, MAS also released another consultation paper that proposed new limits to personal payment accounts that contain e‑money, signifying a changing digital landscape. In another ruling this week, the Singapore High Court also considered why NFTs could constitute intangible property status in a case that involved the sale of Bored Ape NFT.
The regulatory changes to crypto in Singapore come at a crucial time as the race to become an attractive Asian destination continues. Especially when many businesses that were originally based in Hong Kong shifted base to places like Singapore. A recent report by KPMG also found that the ultra-rich from both destinations are going big on crypto investments. That said, Singapore’s central bank has warned again that the trading with cryptocurrencies is highly risky and not suitable for the general public. It has opened its forum for written feedback until Dec. 21 this year.
