The decision by Singapore’s top financial regulator, the Monetary Authority of Singapore (MAS), to impose a ban on crypto lending and staking for retail customers, raised quite a few eyebrows in the crypto community. The requirement set forth by MAS is a part of its latest commitment to safeguard aspects of the burgeoning Digital Payment Token (DPT) services, an umbrella term employed to include services that aid in buying or selling digital tokens or cryptocurrencies. These services are primarily rendered by a few select exchanges.
As per the decrees put forward by MAS, starting from October 2022, DPT service providers will be prohibited from enabling retail customers to lend and stake DPT tokens. According to MAS, such activities do not appropriately fit the risk profile for retail customers. However, these services may persist for institutional and certified investors.
The regulators’ decision has met with both agreement and contradiction. A section of respondents believes that exchanges should still offer these services, but with clearly stated risks and customer’s consent. On the contrary, skeptics insist on a complete ban on what they perceive as “high risk and speculative activities”.
Simultaneously, MAS encourages exchanges to apply vigorous measures to protect customers’ assets. This includes segregation of customers’ assets from the exchange’s own funds, keeping the former in trust. In addition, the authority insists on the operational independence of the custody function from other business sections. To ensure transparency, customers must be vividly informed about the potential risks of storing assets on exchanges.
Undoubtedly, these provisions aim to eliminate customer asset loss or misuse and facilitate asset recovery in cases of insolvency. Yet, MAS sends a word of caution that significant delays in asset recovery might still occur.
Presently, MAS welcomes public feedback on the draft for the legislative amendments to the Payment Services Regulations to make these requirements operative. They have also hinted at the publication of guidelines on the uniform implications of these rules in due course. Concurrently, a consultation paper has been issued by MAS suggesting requirements for DPT service providers for addressing unfair trading practices.
In June this year, MAS shared a whitepaper on purpose-bound money (PBM), a protocol designed to fix benchmarks for the use of digital money including central bank digital currencies (CBDCs) and stablecoins. At this moment, it’s pivotal to observe how these regulations shape Singapore’s crypto landscape and influence equivalent initiatives worldwide.
Source: Cryptonews
