Singapore Orders Crypto Firms to Move User Assets in a Trust by Year-End

  • The requirement to deposit customer assets into a statutory trust comes as a result of a MAS public consultation from October 2022 focused on reducing risk in crypto trading.
  • Singapore’s central bank also restricted crypto firms from facilitating lending and staking to retail customers, though the services are still available to institutional clients.
Monetary Authority of Singapore building

Monetary Authority of Singapore building. The Straits Times

The Monetary Authority of Singapore (MAS) is introducing new guidelines for crypto service providers in order to improve investor protection and market integrity in the sector, the central bank said in a press release on 3 July.

According to the announcement, the MAS has required that digital payment token (DPT) service providers deposit customer assets into a statutory trust by the end of the year. The move is not only meant to “mitigate the risk of loss or misues” of assets, but also “faciliatate the recovery of customers’ assets” in the event a DPT service provider goes insolvent. Sigapore’s central bank also warned investors that:

“While the segregation and custody requirements will minimise the risk of loss of customers’ assets, consumers may still face significant delays in recovering their assets in the event of insolvency of the service providers. Consumers must also remain vigilant and not deal with unregulated entities, including those based overseas, as they risk losing all their assets.”

Singapore’s financial regulator also decided to restrict DPT service providers from facilitating lending and staking to their retail customers, though they are still allowed to offer these services to institutional and accredited investors. The MAS also indicated that the ban on retail crypto lending and staking could change in the future, and that it will “monitor market development and consumer risk awareness” to ensure that its regulatory measures “remain balanced and appropriate”.

The new custody requirements come as a result of a MAS public consultation from October 2022, focused on regulatory measures that would reduce the risk of crypto trading, which MAS said received “significant interest” from a wide range of respondents. The financial regulator also issued a public consultation paper on Monday, proposing requirements for DPT service providers to address unfair trading practices.

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