Singapore Central Bank Cracks Down on Crypto Speculation, Opens Doors for Savvy Investors

MAS Releases Final Regulations for Crypto Service Providers, Maintaining Restrictions on Retail Customers' Speculative Activities

The Monetary Authority of Singapore (MAS) has released its final response to feedback on proposed regulations for crypto service providers. The central bank has maintained its requirement for crypto entities to discourage cryptocurrency speculation by retail customers. This means they cannot offer financing, margin transactions, or any incentives to trade. Additionally, the MAS wants crypto entities to refrain from accepting locally issued credit card payments and to assess a customer’s risk awareness before granting access to their services. This announcement is the second part of the MAS’s response to feedback on its proposed regulations for digital payment token (DPT) service providers in Singapore. The first part, released in July, mandated that providers deposit customer assets under a statutory trust for safekeeping by the end of the year.

According to Angela Ang, a senior policy adviser for blockchain intelligence firm TRM Labs and a former MAS regulator, the MAS’s stance against speculative retail trading has been consistent. She noted that while the MAS has implemented slightly less restrictive measures in certain areas, such as including cryptocurrencies in determining customers’ net worth, they are still largely moving forward with their proposals. Ang believes that the MAS’s willingness to consider industry feedback, even if they do not always agree, is indicative of their commitment to listening to various perspectives.

One of the less restrictive measures introduced by the MAS is the easing of limits on qualifying as an accredited investor. The MAS clarified that certain crypto assets can be counted toward the S$2 million ($1.5 million) net worth requirement. Additionally, exchanges are now allowed to establish their own criteria for listing tokens as long as they disclose conflicts of interest, publish listing criteria, and establish procedures for resolving customer disputes. In contrast, Hong Kong’s approach is more prescriptive, only allowing tokens that meet the regulator’s criteria.

The MAS has also introduced high availability and risk incidents reporting stipulations. These requirements align with those imposed on other systemically important financial institutions but are unique to the crypto industry, as they are not imposed on payment service providers. The MAS has implemented a phased approach to the implementation of these rules, with the transition period starting in mid-2024 to ensure a smooth adaptation.

The objective of these regulations is to limit potential harm to consumers. However, the MAS acknowledges that while the business conduct and consumer access measures can help achieve this objective, they cannot protect customers from losses associated with the inherently speculative and highly risky nature of cryptocurrency trading. Ho Hern Shin, the deputy managing director for financial supervision at MAS, emphasized this point.

In conclusion, the MAS has released its final response to feedback on proposed regulations for crypto service providers. The central bank has maintained its stance against speculative retail trading and has introduced measures to discourage such activities. While some restrictions have been eased, the MAS remains committed to protecting consumers while allowing for industry growth. The phased implementation of these regulations will provide a sufficient transitional period for compliance.

Martin Reid

Martin Reid

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