Singapore will introduce stricter regulations for cryptocurrency service providers after considering feedback on a regulatory proposal. The country's financial authority said the consulted proposals outline business conduct standards and measures to limit consumer access to mitigate potential harm.
These changes include prohibiting crypto service providers in Singapore from accepting locally issued credit card payments, offering incentives to trade cryptocurrencies, and offering financing, margin or leveraged transactions to retail customers. The finalized measures will be phased in from mid-2024, according to a statement from the Monetary Authority of Singapore (MAS).
The regulator also plans to issue rules on business ethics, such as requiring cryptocurrency service providers to publicly disclose policies, procedures and criteria for listing digital payment tokens. In addition, the rules will establish effective procedures for responding to customer complaints and resolving disputes.
Ho Hern Shin, Deputy Managing Director of Financial Supervision at MAS, emphasized that digital payment token (DPT) service providers have a responsibility to protect the interests of consumers who interact with their platforms and use their services. While measures related to business ethics and consumer access can help achieve this goal, he noted that they cannot fully protect customers from the risks associated with the speculative and high-risk nature of cryptocurrency trading.
Robson Lee, a partner at law firm Kennedys Law, stressed that retail consumers should not blindly trust crypto operators licensed by MAS, as any form of investment inevitably carries risks.
David Gerald, founder and executive director of the Securities Investors Association (Singapore), echoed similar sentiments. While the MAS regulations provide protection for consumers, he argues that the risks involved are too great for retail investors. According to him, no regulation can fully protect retail investors, and every individual should be aware that investing in cryptocurrencies carries significant risks.
MAS has repeatedly warned that cryptocurrency trading is a high-risk activity and not suitable for the general public, as cryptocurrency prices are highly affected by volatility and speculation. Singapore has established a framework to regulate payment services and the provision of crypto services to the public through the Payment Services Act, which was enacted in January 2020.
Since the implementation of the Act, Singapore has steadily increased its scrutiny of crypto companies. In July, these companies were ordered to hold customer assets in a legal trust by the end of the year. In addition, MAS also issued a ban on companies facilitating the lending or risking of their retail customers' assets.
Starting in January 2022, Singapore banned crypto service providers from advertising their services in public places or through third parties such as social media influencers. Crypto service providers are now only allowed to market or advertise using their own corporate websites, mobile apps or official social media accounts.
Source: CNBS | The Straits Times
