After the collapse of a crypto hedge fund which caused a significant loss for investors, the Monetary Authority of Singapore (MAS) is proposing improved regulations for the industry to better protect users.
The regulator has published two consultation papers on proposals for regulatory measures for digital payment tokens (DPTs) and stablecoin issuance. This proposal is intended to be part of its Payments Service Act.
According to the proposal which focuses on three key areas – consumer access, business conduct, and technology risk, the regulator is restricting retail investors’ access to credit facilities either in the form of fiat or cryptocurrency.
As one of the forward-thinking regulators in the world, MAS is also proposing that service providers access would-be investors to ascertain if they have the prerequisite knowledge on the highly volatile asset class.
After the assessment, if the investor fails to display sufficient knowledge, the service provider may then be required to provide educational materials to strengthen the customer’s knowledge of the risk of the asset class.
Ultimately, the two consultation paper focuses on consumer protection as the proposal is designed to reduce consumer exposure to risk associated with crypto trading and improve standards of stable related transactions.
In conclusion, the regulator urged consumers to be cautious when dealing with DPTs as regulations cannot completely protect users from losses that may arise from the highly volatile asset. Interested parties have up until December 21 to submit their inputs on the proposal.
Singapore’s move to protect consumers
In light of the failure of several Singapore-based firms in the cryptosphere, the watchdog has shared intentions to be brutal and unrelentingly hard for rogue actors in the cryptocurrency market.
While Singapore has maintained a friendly and welcoming ambiance for crypto-related firms it has also made efforts to protect consumers.
The recent proposal continues the regulator’s plan to protect customers. Recall that earlier in the year, the Singaporean parliament approved the Financial Services and Markets Bill to bring additional regulation to the crypto industry. The new regulation imposes a fine of $1 million for any exchange that suffers a security breach.
Meanwhile, London-based cryptocurrency exchange Blockchain.com recently secured in-principle regulatory approval for a DPT license from the Singaporean regulator joining the likes of Crypto.com and Coinbase.