Singapore’s central bank is rolling out new measures to improve investor protection and market integrity in the cryptocurrency industry.
On July 3, the Monetary Authority of Singapore (MAS) Announce A new requirement for crypto service providers is to place client assets in legal trusts by the end of the year.
“This will reduce the risk of loss or misuse of client assets and facilitate the recovery of client assets in the event of insolvency of a DPT service provider,” the regulator said.
The new custody measures follow a public consultation on regulatory measures to reduce risks posed to consumers by cryptocurrency transactions. roll out October 2022. According to MAS, the consultation received “great interest” from a wide range of respondents.
Singapore’s central bank in formal response to public consultation famous Most respondents agreed that digital payment token service providers (DPTSPs) should be allowed to hold user assets in the same trust account as those of other users.
“However, some respondents disagreed, suggesting that DPTSPs should segregate each client’s assets in separate blockchain addresses from those of other clients,” MAS wrote. Respondents indicated that personal escrow segregation would allow clients to identify and verify their own holdings, leading to greater transparency.
In addition to custody requirements, the HKMA also requires cryptocurrency firms to conduct daily reconciliations of client assets and keep appropriate books and records. The DPTSP is also required to maintain access and operational control over the Singapore client DPT and ensure that the custody function is operationally independent from other business units.
Additionally, the regulator is also working on a proposal to restrict crypto service providers from lending or staking their retail clients’ DPTs. However, for institutional and accredited investors, DPT providers may continue to facilitate such activities.
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MAS added that some respondents suggested allowing cryptocurrency firms to offer lending and collateral subject to retail client consent and risk disclosure. “Others have argued for a ban on these high-risk and speculative activities,” the regulator noted, adding:
“The HKMA will monitor market developments and consumer risk awareness at all times, and will take steps to ensure our measures are balanced and appropriate.”
The latest investor protection-related regulatory developments in Singapore are aimed at addressing the implosion of industries such as FTX that have cost clients millions of dollars. Additionally, the 2022 crypto lending crisis had a major impact on businesses in Singapore, with local majors such as Three Arrows Capital and Hodlnaut going bust in the bear market.
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