Singapore Unveils Strict Measures
These proposals follow a consultation conducted by MAS in October last year, aiming to reinforce the regulatory regime for digital assets.
The Monetary Authority of Singapore (MAS) has proposed compelling cryptocurrency exchanges to secure customer assets in a trust before the year’s end, according to a July 3 Bloomberg report. The MAS has also pushed ahead with a proposal to ban lending and staking activities for retail investors.
Having initiated a consultation in October last year, before the FTX incident, the MAS received substantial support for reinforcing its regulatory regime for digital assets. The proposed measures aim to heighten customer safeguards and ensure the operational independence of custodial functions.
According to the new regulations, cryptocurrency firms will be required to conduct daily reconciliation of customer assets, maintain meticulous records, and establish access and operational controls for customers’ digital payment tokens (DPTs) held within Singapore. Moreover, the custody function must remain operationally distinct from other business units, bolstering the security and integrity of customer funds.
To enhance transparency, licensed crypto companies will be obliged to provide explicit disclosures to customers regarding the associated risks of entrusting their assets to the service provider. This move seeks to ensure that customers are fully informed before making decisions about their funds on these platforms.
In addition to these measures, the MAS intends to prohibit DPT service providers from facilitating lending or staking activities for retail customers. Recognizing the inherent risks involved, such activities are deemed unsuitable for the general public.
While Singapore adopts a cautious approach to digital assets, other jurisdictions, such as Hong Kong, are actively seeking to attract greater participation from both individuals and institutions.
Conclusion
The proposed regulatory measures by the Monetary Authority of Singapore aim to enhance customer asset protection and operational transparency within the digital asset space. By requiring daily reconciliation of customer assets, meticulous record-keeping, and operational separation of custodial functions, Singapore seeks to ensure the security and integrity of customer funds held within its borders. Additionally, prohibiting lending and staking activities for retail customers reflects the commitment to safeguarding the public from potential risks associated with such practices. As Singapore takes a cautious stance, other jurisdictions, like Hong Kong, are actively encouraging participation in the digital asset market.
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