The Monetary Authority of Singapore (MAS) has issued new crypto regulation proposals after a series of collapses and recent court decisions on the legislative front.
Proposals were released in two consultation papers on Wednesday that outlined rules for crypto trading by retail investors to keep them safe.
Singapore proposes new crypto regulation
A significant change in the new regulations is to control consumer access to cryptocurrency trading by preventing credit facilities from providing services to retail consumers.
Ms Ho Hern Shin, Deputy Managing Director (Financial Supervision), MAS, said: “The two sets of proposed measures mark the next milestone in enhancing Singapore’s regulatory approach to fostering an innovative and responsible digital asset ecosystem. Regulations go hand in hand with innovation in financial services.”
Additionally, digital payment token (DPT) service providers will need to develop procedures for ensuring adequate asset segregation for their customers, minimizing any potential conflicts of interest brought about by their different roles, and managing complaints. . All DPT service providers will also be required to take steps to mitigate technical risks related to the “availability and recovery” of their critical systems.
The new crypto regulations will be added to the Payment Services Act which guides Singapore’s domestic crypto sector.
can win stable coins
MAS sets risk disclosure requirements for crypto providers acknowledging the benefits of the asset class. It noted, “The regulations cannot protect consumers from losses arising from the inherently speculative and highly risky nature of DPT trading.”
Meanwhile, despite the LUNA crisis rocking the crypto market, MAS has promised to allow stablecoin development as a reliable means of exchange. “MAS will regulate issuance of stablecoins that are pegged to a single currency (SCS), where the value of the SCS in circulation exceeds S$5 million,” the regulator noted.
Specifically, the country’s crypto regulation requires all SCS issuers to hold reserve assets in cash, cash equivalents, or short-dated sovereign debt securities.
The race to be the ultimate crypto destination
Earlier this month, the watchdog granted a license to Coinbase, a Nasdaq-listed crypto exchange, to operate in the country. The exchange joins a group of about 15 companies authorized to provide services for digital assets in a crypto-friendly nation, including Crypto.com.
However, following several liquidation orders following the collapse of high-value crypto businesses including Three Arrows Capital (3AC), the country is taking strict regulatory measures.
On 18 October, MAS also issued another consultation paper proposing new limits for personal payment accounts with e-money, reflecting the changing digital landscape. In another ruling this week, the Singapore High Court also considered why NFTs could create intangible asset status in a case involving the sale of Bored App NFTs.
As the race to become an attractive Asian destination continues, regulatory changes for crypto in Singapore come at a critical time. Especially when many businesses that were originally based in Hong Kong relocated 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 again warned that “trading in cryptocurrencies is highly risky and not suitable for the general public.” It has opened its platform for written feedback till December 21 this year.
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