Singapore’s financial authority mandates crypto companies to hold customer assets in trust.

Singapore’s cryptocurrency sector is going through significant changes as the Monetary Authority of Singapore (MAS) has introduced new measures that require crypto companies to protect customer assets. This move is part of ongoing efforts to reduce risks associated with virtual assets and ensure the recovery of assets in case of bankruptcy. According to an official announcement on July 3, the financial regulator stated that crypto service providers will be required to deposit customer funds into a statutory trust by the end of this year.

The new rules aim to enhance investor protection and ensure the safekeeping of cryptocurrencies within the country’s digital asset sector.

Ban on Staking and Lending Programs for Retail Investors

Under the new requirements, which were proposed after a public consultation held in October 2022, MAS has decided to limit the involvement of digital asset providers in lending or staking activities for retail customers.

The consultation took place a few months after MAS Chairman Tharman Shanmugaratnam mentioned in July that authorities are considering implementing a series of rules to restrict retail participation in crypto trading and the use of leverage in crypto transactions.

As a result of the October consultation, the financial watchdog has now banned crypto companies from offering such services to retail investors. However, this legislation only applies to retail traders, as institutional and accredited investors will still have access to these offerings.

During the consultation process, the regulator received various opinions on the proposal. Some respondents suggested that crypto exchanges should be allowed to offer lending and staking services to retail customers, provided they obtain the customer’s consent and provide sufficient risk disclosures. On the other hand, some respondents advocated for a complete ban on these activities, citing their speculative nature and potential risks.

MAS’s decision to introduce these regulatory measures aligns with its goal of balancing the protection of retail traders and fostering a favorable environment for institutional investors. The rules take into account industry feedback, including the practical challenges of requiring an independent custodian for customer assets.

Monetary Authority of Singapore Seeks Public Opinion on New Crypto Rules

To ensure the effective implementation of the new requirements, Singapore’s financial regulator has opened the draft legislative amendments to public feedback. This feedback will help shape the guidelines that govern the country’s crypto sector and ensure consistent application across all digital asset service providers.

The financial regulator remains open to monitoring market developments and consumer risk awareness and may consider revising its ban on lending and staking activities for retail customers.

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