Crypto service providers not allowed to facilitate lending, staking services on retail clients’ assets: MAS
Yong Hui Ting
DIGITAL payment token service providers (DPTSPs), or crypto service providers, will not be allowed to facilitate lending and staking services on their retail customers’ assets, said the Monetary Authority of Singapore (MAS) on Monday (Jul 3).
Before the year ends, these service providers must also safe-keep customer assets under a statutory trust, the central bank added.
These measures are part of a slew of proposed amendments to the Payment Services Regulations, announced on Monday, following several high-profile collapses in the crypto industry in the past year.
Under the proposed amendments, DPTSPs are also to segregate customers’ assets from providers’ own assets and hold them in trust, conduct daily reconciliation of customers’ assets, and maintain access and operational controls to customers’ digital payment tokens (DPTs) in Singapore.
Further, the providers must also ensure that the custody function is operationally independent from other business units, as well as provide clear disclosures to customers on the risks involved in having their assets held by the DPT service provider.
The proposed measures come after a public consultation launched by MAS in October last year, on regulatory measures to enhance investor protection and market integrity in DPT services.
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MAS is now seeking public feedback on the draft legislative amendments to the Payment Services Regulations, before the proposed changes come into effect.
The central bank said that 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.
It also advised customers to exercise utmost caution when trading in DPTs as they may lose their assets.
“MAS reminds the public that regulations alone cannot protect consumers from all losses, given the extremely high risk and speculative nature of DPT trading.
“Consumers must also remain vigilant and not deal with unregulated entities, including those based overseas, as they risk losing all their assets.”
Separately, MAS also issued a consultation paper proposing requirements for DPT service providers to address unfair trading practices, such as wash trading, pump-and-dump schemes, among others.
These include suggestions for DPTSPs to execute customers’ orders in a fair, orderly and timely manner, prevent and detect unfair trading practices, as well as ensure that the trading of digital payment tokens is fair, orderly and transparent.
Interested parties may submit their written comments for both the amendments to the Payment Services Regulations and the consultation paper to MAS by Aug 3.
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