The Monetary Authority of Singapore stated on November 23, 2023 that the proposed regulations, informed by public feedback, outline business conduct and consumer access measures to mitigate potential harm.

Singapore’s Payment Services Act, a regulatory framework governing payment services and the provision of crypto services to the public, became effective in January 2020. Subsequently, Singapore has intensified its oversight of crypto firms. In July, it mandated companies to safeguard customer assets through a statutory trust by the year’s end. The Monetary Authority of Singapore (MAS) also imposes restrictions on firms, barring them from facilitating lending or staking of retail customers’ assets.

In January 2022, Singapore implemented a ban on crypto service providers promoting their services in public spaces or through intermediaries such as social media influencers. Marketing or advertising by crypto service providers is now limited to their official corporate websites, mobile applications, or designated social media accounts.

The Monetary Authority of Singapore (MAS) has put forth revised guidelines aimed at mitigating the escalating phenomenon of digital asset speculation within retail markets. These measures encompass prohibiting crypto service providers from accepting locally issued credit card payments, disallowing incentives for cryptocurrency trading, and restricting financing, margin, or leverage transactions for retail customers. The finalized measures are scheduled to be phased in, commencing in mid-2024, according to MAS. 

The regulator will additionally introduce rules related to business conduct, including the mandate for crypto service providers to publish policies, procedures, and criteria governing the listing of a digital payment token. They are also required to establish effective procedures for handling customer complaints and resolving disputes.

 In a recent publication, the Central Bank issued modified regulations applicable to digital payment token providers and affiliated cryptocurrency entities, focusing on market activities with a specific emphasis on diminishing price speculation. As per the documentation, companies will be prohibited from offering trading incentives to customers, aligning with authorities’ sustained argument that certain users are enticed into speculative activities, potentially leading to substantial gains but with an associated risk of significant losses.

Highlighted incentives, subject to the proposed guidelines, encompass the provision of leverages and margins, with certain forms of financial support now facing potential prohibition. These regulatory measures align with the government’s broader strategy to fortify safeguards against fraud and minimize risks within the retail market. Against the backdrop of cryptocurrency firm implosions causing significant market losses, both local and global authorities are increasingly advocating for measures to enhance investor safety in financial markets.

Financial limitations and wider retail regulations

The financial regulatory authority additionally suggests the cessation of credit lines for acquiring specific assets, as companies are set to be barred from accepting transactions facilitated through domestically issued credit cards. 

Moreover, the newly proposed guidelines impose restrictions on referrals that provide incentives for onboarding new clients, and learn-to-earn programs face limitations as well. It’s noteworthy that these fresh regulations extend their applicability to all retail investors, encompassing both accredited and unaccredited users.

Geographically, the guidelines have a reach that extends to retail traders situated just beyond the confines of the city-state. Scheduled to come into effect in mid-2024, these rules have been proposed following a year-long series of public consultations, aiming to establish comprehensive regulations for digital asset payment token providers.

In addition to the global crisis instigated by Terra and FTX last year, investors in Singapore were also impacted by the fallout from Three Arrows Capital. The collapse of Three Arrows Capital prompted a renewed regulatory scrutiny of the market, prompting authorities to reassess and strengthen regulatory measures to bolster investor protection and market stability.

The Deputy Managing Director for Financial Supervision at MAS emphasized that despite the proposed rules, it would remain challenging to entirely shield users from succumbing to the inherently speculative and high-risk nature of digital assets. MAS is encouraging consumers to stay vigilant and exercise the highest level of caution when engaging in Digital Payment Token (DPT) services, and to refrain from transactions with unregulated entities, including those operating from abroad.

Singapore enhances broader regulatory frameworks

Singapore is undergoing a broad regulatory overhaul, solidifying its position as a significant crypto hub in Asia. Numerous firms are converging on the country, and a multitude of others are actively pursuing licenses to provide services related to digital assets.

The nation has introduced regulations specifically addressing stablecoins, aligning with other jurisdictions that recognize their significance as pivotal instruments in assuming the role of digital currency alongside Central Bank Digital Currencies (CBDC). The regulatory stance emphasizes that private cryptocurrencies are deemed suboptimal, citing their lackluster performance as a medium of exchange or store of value, susceptibility to sharp speculative fluctuations, and the substantial losses experienced by many cryptocurrency investors. 

Singapore’s forward-thinking ecosystem and tax-friendly regulations position it at the forefront of the Crypto Adoption Index. The city-state stands as a global leader in nurturing innovation and technology within its cryptocurrency sector. Our team will closely monitor regulatory developments in Singapore and provide timely updates as they unfold.

The content of this article is intended to provide a general guide to the subject matter, not to be considered as a legal consultation.

photo source