Singapore Proposes New Regulatory Measures for Crypto Investments

The Monetary Authority of Singapore (MAS) has released new proposals for crypto regulation following a series of collapses and recent court rulings. The regulator recognizes the benefits of cryptocurrencies but wants to protect retail investors from losses.

The proposals were published on Wednesday in two consultation papers outlining rules for retail investors to protect crypto trading. According to Ho Hern Shin, Deputy Managing Director of MAS, the two proposed sets of measures mark the next milestone in improving Singapore’s regulatory approach to fostering an innovative and responsible ecosystem for digital assets. Regulation will go hand in hand with innovation in financial services.

Singapore has new crypto regulatory plans

A key change in the new rules is to control consumer access by preventing lending institutions from offering retail cryptocurrency. Digital Payment Token (DPT) providers must also ensure appropriate asset segregation for their customers, mitigate potential conflicts of interest arising from their different roles, and develop procedures for handling complaints.

All DPT service providers must also take measures to mitigate technological risks related to the “availability and recoverability” of their critical systems. The new crypto regulations will be added to the Payment Services Act, which regulates the domestic crypto sector in Singapore.

Stablecoins as an accepted trading currency

MAS has established risk disclosure requirements for crypto providers while recognizing the benefits of the asset class. She also noted that in most cases, the rules do not protect consumers from losses due to the speculative and high-risk nature of DPT trading.

Meanwhile, MAS promises to allow the development of stablecoins as a reliable medium of exchange. The regulator noted that it will also regulate the issuance of stablecoins. This also includes those linked to a single currency (single currency stablecoin, SCS) if the value of the outstanding SCS exceeds $5 million. Specifically, all SCS issuers are required to hold reserve assets in the form of cash, liquid funds or short-term government bonds under the country’s crypto regulation.

Race to the ultimate crypto hub

Earlier this month, regulators granted Nasdaq-listed crypto exchange Coinbase a license to operate in the country. The exchange joined a group of around 15 companies that are allowed to offer digital asset services in the crypto-friendly country. But after several liquidation orders following the collapse of valuable crypto companies, including Three Arrows Capital (3AC), the country is taking tough regulatory measures.

On October 18, MAS released another consultation paper proposing new limits on personal payment accounts containing e-money, indicating a changing digital landscape. In another ruling this week, Singapore’s Supreme Court considered why NFTs could have intangible property status in a case involving the sale of bored monkey NFTs.

The regulatory changes for cryptocurrencies in Singapore come at a crucial time as the race for Asian location appeal continues. Especially at a time when many companies originally based in Hong Kong have moved to places like Singapore. A recent report by KPMG also revealed that the super-rich from both destinations are investing heavily in cryptocurrencies. Nevertheless, the Central Bank of Singapore has again warned that cryptocurrency trading is very risky and not suitable for the public. She has opened her forum for written feedback until December 21 this year.

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