Singapore’s MAS Unveils New Measures for Digital Payment Token Services
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Singapore’s financial market regulator, the Monetary Authority of Singapore (MAS), recently proposed new measures that will affect the Digital Payment Token (DPT) service providers. According to the new rules, DPT service providers could end up obligated to safely keep customers’ assets under a statutory trust before the year ends.
Service providers have to keep all customer funds separate from their own money, according to the MAS. In addition, they also have to conduct a daily reconciliation of the assets. The MAS was also very strict about keeping proper records, and disclosing any and all risks involved with dealing with DPTs to the customers before they dedicate any funds to these businesses.
DPTs will not be able to offer staking and lending services to retail investors
In addition to mentioned obligations, the MAS’s proposal also carries some restrictions. For example, if the amendment to the legislation passes, the DPT service providers will no longer be allowed to facilitate staking and lending services for retail investors.
After considering these activities, the regulator decided that they were too risky for retail investors. Instead, DPTs will only be able to offer such services to institutional users, where they will be handled by professionals.
These new measures emerged after the MAS conducted a public consultation process last October. The regulator allowed the public to share its views on enhancing investor protection, and the idea of introducing stricter regulations for DPT services.
The regulator is currently still seeking public feedback in regard to the new changes prior to their implementation. If the public decides that the proposed changes are welcome, the regulator intends to publish a full guideline on their implementation.
The MAS’ announcement said, “While the segregation and custody requirements will minimize the risk of loss of customers’ assets, consumers may still face significant delays in recovering their assets in the event of insolvency of the service providers.”
Singapore takes steps to regulate the crypto industry
In another recent development, Singapore’s central bank published a report involving a framework for developing interoperable networks for cryptocurrencies. The framework was called “Enabling Open and Interoperable Networks,” and its goal is to increase the efficiency and safety of digital asset networks.
Meanwhile, the MAS is also planning an elaborate expansion of its Project Guardian. This was presented as an initiative that will assess the feasibility of DeFi and asset tokenization. One portion of the regulator’s idea is to establish a new body called the Project Guardian Industry Group. The new body would bring together more than 10 different financial institutions, including Standard Chartered, HSBC, DBS, and Citi.
These and other financial institutions would conduct a joint pilot study on several key concepts, such as fixed income, wealth management, and foreign exchange. The MAS expects the initiative to restrict certain risks involved with cryptocurrencies, including CBDCs and stablecoins.
