The Monetary Authority of Singapore (MAS) has released a new set of proposed regulations concerning Digital Payment Token (DPT) service providers. The enhanced regulatory measures, set to effect by year-end, aim to reduce risk and safeguard customer assets.
These vital regulatory measures were unveiled in response to a public consultation held in October 2022 that demonstrated considerable interest from diverse participants. Key expectations that emerged from the process included:
The segregation of customers' assets from the service provider's holdings, ensuring they are securely held in trust.
The implementation of safeguards to protect customers' funds.
The commitment to daily reconciliation of customer assets and the maintenance of comprehensive records.
Establishing robust access controls to customers' DPTs within Singapore.
Ensuring the independence of the custody function from other business operations.
Providing clear, unequivocal disclosures on risks associated with having assets held by the DPT service provider.
Moreover, to protect the interests of retail investors, MAS has declared a restriction on DPT service providers from facilitating lending or staking activities with retail customers' DPTs. While this proposal received mixed responses, MAS has decided to proceed with it. Nonetheless, such activities can still be facilitated for institutional and accredited investors.
MAS acknowledges the inherent risks associated with DPT trading. Consumers are urged to remain vigilant, especially when dealing with unregulated entities, including overseas-based organizations. Although the new measures reduce the risk of asset loss, consumers may still face delays in asset recovery in case of service provider insolvency.
Furthermore, MAS announced a separate consultation paper introducing regulatory measures to combat unfair trading practices within the DPT sector. This paper proposes new requirements for DPT service providers and identifies specific wrongful conduct considered an offense.
The information provided is not legal, tax, investment, or accounting advice and should not be used as such. It is for discussion purposes only. Seek guidance from your own legal counsel and advisors on any matters. The views presented are those of the author and not any other individual or organization. Some parts of the text may be automatically generated. The author of this material makes no guarantees or warranties about the accuracy or completeness of the information.
Comments