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In a quest for enhanced security and overall purity in the crypto market, Singapore has taken firm strides by introducing stringent regulatory measures for digital currency service providers. The Monetary Authority of Singapore (MAS) is now keen on taking a hard stance against specific activities like lending and staking enabled by these providers for their average, non-professional clients.
Monday saw MAS declare the introduction of several rules for providers handling Digital Payment Tokens (DPT). The central objective is to ensure that these digital assets of customers are kept under statutory trust by the end of the current year. This action plan comes in response to an October public consultation last year, focusing on improving the protection for investors and maintaining the integrity of the DPT services market. The intention is to lower the risk of customer asset loss or misuse and to ensure easier asset recovery if a DPT service provider becomes insolvent.
Feedback is currently being solicited on these draft modifications to the Payment Services Regulations by MAS. This legislative change aims to enforce the new requirements effectively.
Interestingly, these consultations were set in motion just before the infamous downfall of the FTX crypto exchange last November. The Singaporean government investment entity, Temasek Holdings, suffered a severe blow from this, writing down the complete $275 million value of its FTX investment post-bankruptcy.
Alongside this, MAS announced the upcoming imposition of limitations on digital currency lending and staking activities on Monday. The regulator underscored that such activities are generally unfit for non-professional investors. However, the regulator reassured that accredited and institutional investors could still avail these services from DPT service providers.
Investors were given a stark reminder by MAS: the new requirements, although reducing asset loss risk, might still cause significant delays in asset recovery if a service provider goes insolvent. The regulator stressed the importance of consumer vigilance and discouraged transactions with unregulated entities, including foreign-based ones, to avoid potential total asset loss.
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