- MAS ordered Singapore-based crypto firms to keep customer assets in trust by the end of 2023.
- Reportedly, the government claimed that custodial independence is required for customer asset protection among “digital payment token service providers.”
- These newly proposed regulations mandate daily reconciliation, accurate records, and operational controls for customer assets.
Bloomberg reported that Singapore’s Monetary Authority of Singapore (MAS) stated on Monday that Singapore-based cryptocurrency exchanges will need to hold customer assets in a trust before the end of 2023.
MAS previously announced that there was widespread backing for measures to protect customers’ funds among digital payment token (DPT) service providers.
In addition, the exchanges will be required to ensure that the custody function operates independently from other business units. Meanwhile, licensed cryptocurrency firms will also be obligated to provide transparent and comprehensive information to customers regarding the risks associated with having their assets held by the service provider.
According to the proposed regulations, these companies will be required to perform daily reconciliation of customers’ assets, maintain accurate records, and establish access and operational controls for customers’ DPTs within Singapore.
MAS has taken this measure in order to protect user funds after the violent collapse of Sam Bankman-Fried’s FTX. Additionally, Singapore plans to ban lending and staking for retail investors and is actively pursuing a proposal.
Nevertheless, crypto companies can continue to offer lending and staking services to institutional and officially recognized investors.
The regulator released two consultation papers on October 26, 2022, presenting regulatory proposals concerning digital payment token service providers (DPTSPs) and certain stablecoin issuers. These public consultations were initiated to foster innovation while addressing consumer risks associated with cryptocurrency activities in Singapore.
The MAS is currently inviting public input on the draft legislative amendments to the Payment Services Regulations, which are expected to implement these requirements.
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