MAS orders crypto firms in Singapore to keep customer assets in trust by year-end.

Crypto service providers in Singapore will be required to deposit customer assets into a statutory trust by the end of the year for safekeeping, according to an announcement made by the Monetary Authority of Singapore (MAS) on Monday.

This requirement follows a public consultation conducted by MAS in October 2022 to enhance customer protection.

“This measure will help mitigate the risk of loss or misuse of customers’ assets and facilitate the recovery of these assets in the event that a Digital Payment Token (DPT) service provider becomes insolvent,” stated MAS.

MAS has also imposed restrictions on cryptocurrency service providers, prohibiting them from facilitating lending and staking tokens for retail customers. However, institutional and accredited investors can still avail themselves of these services.

The central bank of Singapore has also sought public feedback on legislative amendments to implement these latest requirements.

“The recent tightening of retail access to cryptocurrencies should not come as a surprise to those following the Singapore market,” said Angela Ang, Senior Policy Advisor for blockchain intelligence firm TRM Labs and former MAS regulator. “MAS’ decision to hold back on certain proposals, such as mandating an independent custodian for customer assets, demonstrates that it is attentive to the industry and considers practical factors, such as the lack of third-party custodians.”

Ang also mentioned in an email that Singapore’s requirements are similar to those imposed on other payment service providers and are not as strict as Hong Kong’s regulations. Singapore now requires 90% of customer crypto to be held in crypto wallets, while Hong Kong’s requirement is 98%. Additionally, Singapore does not mandate that cold wallets be stored onshore, unlike Hong Kong.

MAS indicated that its stance on banning crypto entities from facilitating lending and staking of tokens for retail customers may change in the future.

“Some respondents suggested allowing DPT service providers to offer these activities with the consent of retail customers and with proper risk disclosures, while others advocated for a complete ban on these high-risk and speculative activities,” MAS stated. “MAS will monitor market developments and consumer risk awareness as they evolve and will take appropriate steps to ensure that our measures remain balanced.”

Singapore’s commitment to supporting technological advancements in the industry to enhance traditional financial systems aligns with its objective of being strict towards misconduct in the crypto industry. MAS has also recently proposed ways to establish open, interoperable networks for tokenized digital assets and standards for the use of digital money.

Read More: Singapore: The Center of Asian Crypto Wealth Is Ready for a Reset

UPDATE (July 3, 2023, 09:00 UTC): Provides additional details and context throughout and includes comment from Angela Ang.

UPDATE (July 3, 2023, 09:27 UTC): Includes second paraphrased comment from Angela Ang.

Edited by Parikshit Mishra.

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