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Enhanced Regulations on Cryptocurrency for Retail Customers in Singapore

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Enhanced Regulations on Cryptocurrency for Retail Customers in Singapore

Singapore is set to implement more stringent regulations for cryptocurrency service providers based on feedback received regarding its initial proposals. The Monetary Authority of Singapore announced on Thursday that the revised proposals outline specific measures related to business conduct and consumer access. These measures aim to mitigate potential harm to consumers, reflecting the city-state’s commitment to fostering a secure and responsible cryptocurrency environment.

The forthcoming measures encompass prohibiting cryptocurrency service providers in Singapore from accepting credit card payments issued locally, incentivizing cryptocurrency trading, and extending financing, margin, or leverage transactions to retail customers. The Monetary Authority of Singapore (MAS) has outlined that the implemented measures will be rolled out in phases, commencing in mid-2024.

The regulatory body will additionally introduce guidelines related to business conduct, mandating that cryptocurrency service providers publish their policies, procedures, and criteria governing the listing of digital payment tokens. Furthermore, they must establish robust procedures for handling customer complaints and resolving disputes. Ho Hern Shin, Deputy Managing Director of Financial Supervision at MAS, emphasized that digital payment token service providers bear the responsibility of safeguarding the interests of consumers engaging with their platforms and utilizing their services.

“While these measures related to business conduct and consumer access contribute to achieving this objective, they cannot fully shield customers from potential losses inherent in the speculative and high-risk nature of cryptocurrency trading,” stated Ho. He emphasized the importance of consumers maintaining vigilance and exercising extreme caution when engaging in digital payment token services. Additionally, he advised against dealing with unregulated entities, including those located overseas.

MAS has consistently cautioned that engaging in cryptocurrency trading is exceptionally risky and may not be suitable for the general public due to the volatility and speculative nature of crypto prices. The Payment Services Act in Singapore, which serves as a regulatory framework for payment services and the offering of crypto services to the public, was initially implemented in January 2020.

Singapore has heightened its oversight of cryptocurrency firms, with a directive in July mandating these entities to secure customer assets through a statutory trust by year-end. Additionally, MAS imposes restrictions on firms, barring them from facilitating lending or staking involving the assets of retail customers. In January 2022, Singapore implemented a prohibition on cryptocurrency service providers from promoting their services in public spaces or through intermediaries like social media influencers. These providers are now limited to marketing or advertising solely on their official corporate websites, mobile applications, or authorized social media accounts.

During last week’s Singapore FinTech Festival 2023, Ravi Menon, Managing Director of MAS, expressed that cryptocurrencies have not passed the criteria for digital money. Menon noted their underperformance as a medium of exchange or store of value, citing sharp speculative swings in prices and significant losses experienced by many cryptocurrency investors.

About Rajesh Parmar

Rajesh Parmar

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