Singapore further tightens crypto regulations to protect retail investors from speculative risks

The Monetary Authority of Singapore (MAS) has unveiled expanded regulations to safeguard retail crypto users from potential risks within the burgeoning industry.

In a Nov. 23 statement, the financial regulator directed Digital Payment Token (DPT) service providers within its jurisdiction to adopt specific measures to discourage retail customers from engaging in speculative crypto activities. These measures encompass rejecting credit card payments and eliminating incentives for crypto trading.

Moreover, MAS mandated these service providers to refrain from offering financing, margin, or leverage transactions. They must also assess their customers’ risk awareness levels and restrict the valuation of crypto assets in determining a customer’s net worth.

In addition to these directives, MAS specified that DPTs must actively identify, mitigate, and disclose any potential or actual conflicts of interest within their operations. These providers are also required to publicly outline the policies, procedures, and criteria governing the listing of digital assets. Additionally, they must establish effective protocols for managing customer complaints and resolving disputes.

The regulator emphasized the necessity for DPT service providers to maintain robust and recoverable critical systems, aligning with the stringent requirements imposed on financial institutions.

These newly introduced regulatory measures followed a period of soliciting feedback on proposals for digital payment token services initially released in October of the prior year. The rules are set to be gradually phased in starting mid-2024.

Ho Hern Shin, MAS’ deputy managing director for financial supervision, noted that while these measures safeguard crypto consumers’ interests, “they cannot insulate customers from losses associated with the inherently speculative and highly risky nature of cryptocurrency trading.”

Singapore has been actively fortifying its crypto regulations due to the collapse of several crypto-related firms, including the impact of Terraform Labs’ UST algorithmic stablecoin failure on millions of its citizens.