The Monetary Authority of Singapore (MAS) is set to roll out a series of stringent measures aimed at tightening regulations for digital payment token (DPT) service providers in Singapore. This is part of its efforts to prevent potential consumer harm in the realm of cryptocurrency trading.
The regulatory framework specifies minimum technology and cyber risk management requirements for DPT service providers.
Originally introduced in October 2022, the proposed measures covered three key areas: consumer access, business conduct, and technology risks.
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MAS highlighted its focus on protecting customers from the risks associated with cryptocurrency trading, saying that retail customers who have a full understanding of the associated risks may not possess the financial capacity to handle substantial losses that are normal in cryptocurrency markets.
To mitigate this, the guidelines prohibit DPT service providers from accepting payments via locally issued credit or charge cards, discouraging incentives for cryptocurrency trading among retail customers.
Additionally, these providers are prohibited from offering financing, margin, or leverage transactions, and they must cap the valuation of cryptocurrencies when determining a customer’s net worth.
Moreover, stricter checks on customer risk awareness are mandated for accessing services, with all customers presumed as retail customers by default, except for institutional investors and accredited investors.
Accredited investors or those with at least S$2 million in net personal assets, can be exempted from certain regulations, with a ceiling of 50% of their crypto holdings contributing to this S$2 million limit, capped at S$200,000.
The regulatory guidelines also outline business conduct protocols needed for the identification, mitigation, and transparent disclosure of conflicts of interest.
Additionally, providers must publish comprehensive policies governing the listing of DPT and establish robust mechanisms to handle customer complaints and disputes.
Together with these measures, MAS is set to enforce stringent technology and cyber risk protocols. DPT service providers are mandated to ensure the high availability and recoverability of their critical systems, aligning with prevailing requisites imposed on financial institutions.
“DPT service providers have the obligation to safeguard the interests of consumers who interact with their platforms and use their services,” said Ho Hern Shin, MAS’ Deputy Managing Director.
“While these business conduct and consumer access measures can help meet this objective, they cannot insulate customers from losses associated with the inherently speculative and highly risky nature of cryptocurrency trading.
“We urge consumers to remain vigilant and exercise utmost caution when dealing in DPT services, and to not deal with unregulated entities, including those based overseas.”
The phased implementation of these regulations will start in mid-2024.
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