The Monetary Authority of Singapore (MAS) announced on Monday that crypto service providers in Singapore must deposit customer assets under a statutory trust by the end of the year for safekeeping. This comes after the MAS received public consultation around enhancing customer protection initiated in October 2020. “This will mitigate the risk of loss or misuse of customers’ assets, and facilitate the recovery of customers’ assets in the event of a DPT (Digital Payment Token or Cryptocurrency) service provider’s insolvency,” the MAS said.
MAS has also restricted cryptocurrency service providers from facilitating lending and staking of tokens by their retail customers, but institutional and accredited investors can still be provided the service. Singapore’s central bank has asked for public feedback on legislative amendments focused on the implementation of the latest requirements.
“MAS’ decision to hold back on certain proposals, such as requiring an independent custodian for customer assets, shows it’s listening to the industry and is sensitive to practical considerations such as a dearth of third-party custodians,” said Angela Ang, Senior Policy Advisor for blockchain intelligence firm TRM Labs and former MAS regulator.
The MAS indicated that its position on banning crypto entities from facilitating lending and staking of tokens for retail customers could change in the future. “MAS will monitor market developments and consumer risk awareness as these evolve, and will take steps to ensure that our measures remain balanced and appropriate,” the MAS said.
Singapore’s commitment towards supporting technologies of the industry to improve existing traditional financial systems goes hand in hand with its stated objective of being “brutal and unrelentingly hard” on bad behaviour in the crypto industry. Last month, the MAS also proposed ways to design open, interoperable networks for tokenized digital assets and standards for the use of digital money.