Singapore Reinforces Oversight for Digital Payment Token Services with New Regulatory Measures
The Monetary Authority of Singapore (MAS) is taking significant strides to fortify its regulatory framework for Digital Payment Token (DPT) services. In response to public consultation and feedback, MAS has unveiled a comprehensive set of measures designed to safeguard consumers and enhance the resilience of the burgeoning cryptocurrency landscape.
Business Conduct and Consumer Access Measures
MAS is set to issue guidelines outlining business conduct measures that aim to address potential conflicts of interest among DPT service providers. This includes the clear identification, mitigation, and disclosure of conflicts, along with transparent policies governing DPT listings. Moreover, providers will be required to establish robust procedures for handling customer complaints and resolving disputes.
On the consumer access front, MAS is actively discouraging speculative behavior in cryptocurrency trading. Providers are urged to assess a customer’s risk awareness, refrain from offering incentives for cryptocurrency trading, and avoid providing financing, margin, or leverage transactions. Notably, locally issued credit card payments will be restricted, and the value of cryptocurrencies in determining a customer’s net worth will be limited.
Technology and Cyber Risk Management
Recognizing the criticality of technology and cyber risk management, MAS mandates that DPT service providers maintain high availability and recoverability of their critical systems. This aligns with existing standards imposed on financial institutions, reflecting MAS’s commitment to upholding cybersecurity and operational resilience.
Implementation and Transitional Period
MAS plans to implement these regulatory measures through a phased approach, commencing from mid-2024. This staggered implementation is intended to afford DPT service providers ample time to align with the new requirements effectively.
Consumer Caution and Cryptocurrency Risks
While emphasizing the importance of these measures, Ms. Ho Hern Shin, Deputy Managing Director (Financial Supervision) at MAS, acknowledged the limitations in shielding customers from the speculative and risky nature of cryptocurrency trading. She urged consumers to exercise caution and avoid dealing with unregulated entities, both domestic and overseas.
Singapore’s Evolving Crypto Regulatory Landscape
Singapore’s regulatory journey in the crypto space has been dynamic. The Payment Services Act, initiated in January 2020, laid the foundation for regulating payment services and crypto-related activities. Subsequent enhancements have included mandatory trust arrangements for customer assets, restrictions on lending and staking of retail customers’ assets, and limitations on advertising by crypto service providers.
The newly announced measures underscore MAS’s commitment to strike a balance between nurturing the crypto industry and safeguarding the interests of retail investors. The move aligns with global trends where regulators are increasingly recognizing the need for comprehensive oversight in the face of the evolving digital financial landscape.