Singapore: Crypto Firms Asked to Shift Client Funds to a Trust

Lavina Daryanani
Source: Coingape

On Monday, July 3, the Monetary Authority of Singapore released a set of investor protection measures and new requirements for digital payment token [DPT] service providers. Singapore’s central bank has asked crypto companies to shift client money to a trust before the end of 2023. According to MAS, this measure will help reduce the risk of loss or misuse of customer assets. Parallelly, it would also facilitate the recovery of assets in the event of a DPT service provider’s insolvency.

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In fact, the bank also intends to put curbs on retail staking and lending services, for it deems such activities “not suitable for retail public.” Specifically, the released statement noted,

“MAS will also restrict DPT service providers from facilitating lending and staking of DPT tokens by their retail customers.”

However, DPT service providers can continue fostering lending and staking for big players, including institutions and accredited investors.

Regulations alone can’t protect crypto users from losses: MAS

Alongside protecting customers, the new guidelines intend to uphold “market integrity in DPT services.” Taking a step in that direction, MAS will release another separate consultation paper today proposing requirements for DPT service providers to address unfair trading practices. In fact, it will also set out “legislative provisions” and the “types of wrongful conduct” that constitute offenses.

The MAS asked consumers to continue exercising “utmost caution” while trading with crypto and other digital payment tokens. It was advised not to deal with unregulated entities, including those based on overseas platforms.

Singapore’s central bank noted that segregation and custody requirements “will minimize the risk of loss of customers’ assets.” However, consumers may still face “significant delays” in recovering their assets during bankruptcies and insolvencies. It asserted,

“Regulations alone cannot protect consumers from all losses, given the extremely high risk and speculative nature of DPT trading.”

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