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- 1 Investors protection is becoming the priority of financial regulators whether in Singapore or South Korea.
- 2 MAS suggests measures to crypto service providers for handling the investors’ funds.
In a recent announcement, the Monetary Authority of Singapore (MAS) brought new compliance for crypto service providers. The city-state’s financial regulator also indicated restrictions on the staking and lending services for retail investors in the crypto space.
MAS released the statement on Monday, July 3, 2023, requiring the Digital Payment Token (DPT) providers, or crypto service providers, to keep their customers assets “under a statutory trust” before the year end.
According to the financial regulator, the risk of customers’ crypto assets getting lost or misused would be reduced following the aforementioned measure. Also, in case of the service provider, or crypto company, going bankrupt, the company will be responsible to facilitate the recovery of assets.
Given retail investors’ safety, MAS also limited the crypto service providers from providing lending and staking of cryptocurrencies.
Bloomberg reported the recent action from the financial regulator in Singapore came in the wake of last year’s FTX saga. It started consultation on investors’ safety measures prior to the crypto exchange’s filing for bankruptcy. The recently revealed measures for investors’ safety are the result of consultation.
“MAS will proceed with the proposal to restrict DPT service providers from facilitating lending or staking of their retail customers’ DPTs, as these activities are generally not suitable for retail public. DPT service providers may continue to facilitate such activities for their institutional and accredited investors. There were diverse views received on this proposal,” it stated.
The regulator cited the consultation and stated some respondents were in support of allowing lending or staking services with the “consent and risk disclosure.” At the same time, there were some who asked for banning such “high risk and speculative activities.”
MAS ensured to keep track of developments in the market and awareness of consumers towards risk. This would then lead to keeping the measures “balanced and appropriate.”
More Steps Towards the Direction
Other than Singapore, South Korea has also reported to take steps towards investor protection. The country recently passed the Virtual Asset User Protection Act on Friday, July 1, 2023.
The bill also required crypto service providers in the country to take care of 19 proposed conditions. It includes segregation of users’ cryptocurrencies and deposits, insurance of assets, and to keep some part of the assets in offline cold wallet reserves in case of hacks or failing of systems.
As the two Asian economies are seeking regulations of cryptocurrencies for investors protection, Hong Kong is aiming to become a crypto hub. The regulator in the special administrative region is reported to work towards crypto-friendly regulations. The banks in the region were also instructed to provide financial assistance to the crypto companies.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
