Singapore’s financial landscape is set to witness a transformation as the Monetary Authority of Singapore (MAS) unveils new regulations for Digital Payment tokens (DPT) service providers. These measures, designed to bolster investor protection and market integrity, will require DPT service providers to safeguard customer assets through a statutory trust by the end of the year.
The move comes after a thorough public consultation in October 2022, which received widespread interest and support for enhancing the security of customers’ assets. The proposed changes will necessitate DPT service providers to segregate customers’ assets from their own, keeping them in trust, and conducting daily reconciliations while maintaining proper records.
MAS also seeks to restrict DPT service providers from enabling retail customers to lend or stake DPT tokens, considering the high risks involved. However, these activities will still be available for institutional and accredited investors, though views on this restriction varied during the consultation.
The focus on market integrity remains paramount for MAS. Respondents agreed with the observation on good industry practices to address market integrity risks. Still, some suggested additional measures to prevent market abuse and unfair trading practices, prompting MAS to issue a separate consultation paper to address these concerns.
Despite the stringent regulations, MAS reminds the public that trading in DPTs remains speculative and high-risk. While the new requirements aim to mitigate losses and insolvency risks, consumers must exercise utmost caution.
Although the custody requirements reduce risks, recovery delays may still occur in the event of insolvency. Additionally, consumers are warned against dealing with unregulated entities, including overseas-based ones, to avoid asset loss.
MAS invites interested parties to offer their feedback on the proposed legislative amendments and regulatory measures by August 3, 2023. These proactive steps demonstrate MAS’s commitment to creating a balanced and secure environment for the digital payment token industry, paving the way for a brighter and safer future in Singapore’s financial landscape.