The Monetary Authority of Singapore (MAS), the country’s central bank, has ordered crypto firms to transfer user assets to a statutory trust before the end of 2023. This is another move by the financial authority to regulate the cryptocurrency landscape in the city-state of Singapore.
MAS Prohibits Retail Lending and Staking Services
The Monetary Authority of Singapore has instructed crypto service providers in the country to deposit users’ assets in statutory trust before the close of the year. This is one of the “Investor Protection Measures” published by the central bank to improve investor safety and market integrity in Digital Payment Token (DPT) services.
These regulatory measures are to reduce the risk of losses and prevent the misappropriation of customers’ funds, according to MAS’ statement. Additionally, these requirements would help facilitate the recovery of customers’ funds in the event of bankruptcy.
Another measure being taken by the Monetary Authority of Singapore is the prohibition of crypto service providers from offering lending and staking services to retail customers. According to the regulatory body, lending and staking activities are generally not suitable for the retail public.
However, the central bank noted that DPT service providers may continue to offer lending and staking products to their institutional and accredited investors.
These regulatory measures are the result of a series of public consultations and planning by the MAS to improve the safety and protection of investors’ assets, especially after the high-profile collapses in the crypto industry last year.
Singapore To Clampdown On Fraudulent Crypto Activities
Singapore, like several other nations, has been forced to change its regulatory approach after the series of collapses that rocked the crypto space in 2022. Specifically, the fall of Singapore-based Terraform Labs caused a loss of around $40 billion in the crypto market.
Crypto Market Cap at $1.17 trillion | Source: TOTAL chart from TradingView
MAS’ chief fintech officer Sopnendu Mohanty recently revealed in an interview that Singapore would be “brutal and unrelentingly hard” on fraudulent behavior in the digital assets industry. He also suggested that some crypto enterprises may face an uncertain future in the country.
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That said, the city-state of Singapore remains amongst the most crypto-friendly nations thanks to its modern regulatory strategy and fresh blockchain initiatives. Above all, the island country continues to strive for citizens’ safety by employing effective regulatory protocols.
In June, the MAS published a whitepaper for Purpose-Bound Money (PBM) to specify the conditions for the use of digital money, including central bank digital currencies (CBDCs), tokenized bank deposits, and stablecoins. Some of the PBM applications aim to protect both customers and merchants during online transactions.