Singapore has ordered cryptocurrency firms operating in the country to store customer assets under a statutory trust before the end of the year.
In a press release on Monday, the Monetary Authority of Singapore (MAS), the country’s central bank and regulator, said the new measure would help “mitigate the risk of loss or misuse of customers’ assets, and facilitate the recovery of customers’ assets” in the event of an exchange’s insolvency.
MAS Restricts Retail Lending & Staking Services
MAS said it has also restricted exchanges from offering digital token lending and staking services to their retail clients as the regulators view such services as unsuitable for the retail public. However, this platform is free to offer such products to their institutional and accredited investors.
The measures come after the MAS received a public consultation around enhancing investor protection and market integrity in crypto asset services. The consultation paper was introduced in October 2022 after several industry implosions.
According to the financial regulator, the consultation received significant interest from a large number of respondents, with broad support for crypto asset service providers to separate customers’ assets from their own assets and place in trust, carry out daily reconciliation of customers’ assets, keep proper books and records, and provide clear disclosures to customers on the risks involved in having their assets held by the crypto platforms.
MAS Seeks Feedback on New Measures
The MAS is also seeking public feedback on the draft legislative amendments focused on implementing these new measures.
“While the segregation and custody requirements will minimise 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. Consumers must also remain vigilant and not deal with unregulated entities, including those based overseas, as they risk losing all their assets,” MAS said.
Over the years, Singapore has been viewed as one of the most crypto-friendly nations. However, following the high-profile industry collapse of last year, the city-state appears to have changed its stance towards crypto. Last June, the MAS vowed to be ‘unrelentingly hard’ on crypto.
