Monetary Authority of Singapore Set to Ban Crypto Lending and Staking Offering for Retail Investors
On Monday, July 3, the Monetary Authority of Singapore (MAS) issued an official publication outlining the new measure to support consumer protection. The MAS report demonstrated the regulator’s effort to position Singapore as a burgeoning crypto hub.
The MAS publication revealed the regulators would impose a restrictive measure prohibiting retail investors from engaging in crypto lending and staking activities. The financial regulators argued that crypto lending and staking offerings were unsuitable for retail clients. However, exchanges can provide these products to institutional clients and trusted investors.
Monetary Authority of Singapore Introduces New Laws
In October 2022, they launched a public consultation on the Payment Service Regulation Bill to address exploitative business activities. During the previous public consultation, the respondents supported the drafted bill on investor protection and market integrity measures.
However, some respondents disagreed with some of the proposals issued by MAS. Reflecting on the MAS report, some respondents proposed that exchanges to leverage blockchain technology to ensure user assets are kept separate from other customers assets.
Besides adopting restrictive measures, the regulators outlined the new regulations customers must meet to navigate the crypto industry compliantly. Such requirements will prevent the recurrence of the FTX impolsions or any unregulated crypto transaction that might lead to losing customers’ assets.
Under the new regulatory regime, the Singaporean digital assets service providers (DASP) will be required to transfer customers’ assets to trust accounts before the end of 2023. This regulatory measure addresses risks associated with the misuse of customers’ funds.
Importance of Protecting Customers and Investors
Per the MAS report, the new legislation on DASP will support the recovery of customers’ assets if the exchange goes bankrupt. Also, the DASP must regularly update its financial records to safeguard customers’ assets. The new regulation will require the exchange to provide the customers with relevant information concerning the risks associated with crypto assets.
Irrespective of this, the new rules will mandate the financial regulators to adopt several enforcement actions to ensure that custodial platforms in Singapore operates independently and have no close linkages to other business units.
Meanwhile, the MAS seeks the public to provide valuable insights into the new legislation before its implementation. The financial regulators revealed plans to provide the implementation guideline for the new legislation.
Interestingly the MAS report demonstrates the regulatory actions undertaken by Singapore aims at curbing the potential gaps in the crypto industry. Besides the regulation, Singapore is racing to become a gateway to investment in the Asian Pacific region.
Crypto Regulation in Asian Pacific
A few days ago, MAS issued an in-principle approval to Ripple to allow the San Francisco fintech company to explore Singapore markets. Ripple joins 20 other crypto firms seeking to offer regulated digital assets in Singapore.
As MAS continues to allow more firms to set foot in Singapore, the regulators have confirmed to invest in the launching of programmable digital fiat. In a recently posted whitepaper, MAS announced plans to educate the public on the upside of Purpose Bound Money (PBM). The proposed PBM will require customers to meet specific regulatory conditions for transactions conducted through various systems.
Despite the efforts made by Singapore to attract more firms to the region, the US regulatory clamp downs continue to widen. The flurry of crypto regulation in the US has compelled high-profile firms to expand to the Asian market.
Recently the Hong Kong regulators have introduced new regulations to allow crypto firms to operate in the vibrant market under the transitional agreement. These new rules allow genuine crypto firms to provide the products and services on one year trial period. Afterward, the crypto firms will be required to apply for necessary licenses.
Strategies Used by Asian Countries to Expansion of Crypto Sector
The transitional agreement aims at shaping the crypto regulatory landscape for Hong Kong and supporting fair business practices. In a blog post dated June 30, the Hong Kong authority revealed plans to launch a new task force aiming at supporting the growth of the Web3 sector.
The Hong Kong regulatory action has inspired South Korea to invest in the expansion of crypto industry. Presently the Bank of Korea sealed a memorandum of understanding (MoU) with Samsung to conduct studies for central bank digital currency (CBDC).
On June 30, the Financial Services Commission was tasked to engage in crypto investigations under the virtual assets user protection (VAUP) law in collaboration with the Bank of Korea. It was reported that the Korean parliament passed the VAUP bill into law on Friday.
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