[NEWS] Monetary Authority of Singapore strengthens regulations on cryptocurrency investments, banning leveraged trading

On the 23rd, the Monetary Authority of Singapore (MAS) announced that it will significantly strengthen regulations for retail investors in the cryptocurrency space. These are new investor protection measures for cryptocurrency and digital payment token service providers. Cryptocurrency exchanges, stablecoin-related businesses, and traditional financial institutions will also be subject to regulation.

The new regulations are intended to prevent cryptocurrency speculation among retail customers. These new measures are intended to address potential risks to consumers and ensure the safety of individuals trading cryptocurrency.

The regulations are scheduled to be implemented in stages from mid-2024. They focus on corporate activities, consumer access, technology, and cyber risk management.

Under the new regulations, providers will be required to identify, mitigate, and disclose conflicts of interest. They will also be required to publish policies to manage the list of digital payment tokens and establish procedures for handling customer complaints and resolving them in the event of a court case. They will also be required to outline in detail how retail investors can access the platform.

In addition to explaining customer risk perception, the MAS intends to stop offering incentives for cryptocurrency transactions and prohibit cryptocurrency fundraising and leveraged trading.

In addition, digital payment token providers will be required to prohibit the purchase of cryptocurrency with credit cards and to restrict inflating the value of cryptocurrency when determining customers' net worth.

In terms of technology and cyber risk management, MAS requires digital payment token service providers to maintain high availability and recoverability of critical systems, in line with the requirements imposed on financial institutions.

"Digital payment token service providers must review their platforms and protect the interests of consumers who use their services. We urge consumers to be vigilant and exercise due caution when conducting digital payment token services and not transact with unregulated entities, including those based overseas," MAS Deputy Managing Director Ho Hern Shin said in a statement.

He also argued that MAS's digital payment token service providers need to take measures to mitigate potential risks associated with cryptocurrency transactions so that consumer interests are prioritized. These measures cover multiple aspects and will also ensure that service providers operate in a manner that protects consumers.

MAS has introduced statutory requirements for digital payment token service providers to segregate customer assets. Daily reconciliation and proper management are required, along with risk disclosure to customers.

CBDC activity is also active

In July, MAS announced "Project Guardian" to evaluate assets. It established an industry group of several financial institutions to conduct a pilot to mitigate risks associated with digital assets.

Recently, MAS launched a pilot program to issue a wholesale CBDC (central bank digital currency) in Singapore dollars. The pilot will explore the feasibility and efficiency of using CBDC for real-time payments across commercial banks, marking a move from simulation to implementation.

The pilot saw participating banks issue tokenized liabilities, allowing retail customers to transact seamlessly.

Reference:Announcement
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