Singapore is set to implement stricter measures for retail cryptocurrency service providers to prevent speculation in crypto investments. This was revealed by the Monetary Authority of Singapore (MAS) after the feedback on its proposed DPT (Digital Payment Token) regulations.
The Monetary Authority of Singapore stated five ways DPT service providers can discourage cryptocurrency speculation among retail customers. Those measures include declining locally issued credit card payments, evaluating customers’ risk awareness before granting DPT services, and not incentivizing trading cryptocurrencies.
Additionally, DPT service providers must not offer transactions related to financing, leverage, or margin. And finally, a customer’s cryptocurrency holdings must not be considered when determining their net worth.
In the area of technology and cyber risk, the MAS said it “will require DPT service providers to maintain high availability and recoverability of their critical systems, in line with current requirements imposed on financial institutions.”
On the business conduct side of retail cryptocurrency services, the MAS also said it would issue guidance on how DPT service providers can implement some measures that are considered very important by a majority of respondents.
These measures will border around how to identify, combat, and clearly reveal potential conflicts of interest. Secondly, how to publish governing policies, procedures, and criteria for the listing of a DPT. And lastly, how to establish “effective policies and procedures” to manage and resolve customer complaints and disputes.
“DPT service providers have the obligation to safeguard the interests of consumers who interact with their platforms and use their services,” said Ms Ho Hern Shin, Deputy Managing Director (Financial Supervision), MAS.
Mrs. Shin added that although the business conduct and customer access regulations can help safeguard customers’ interests, it’s impossible to completely shield customers from losses associated with the typically speculative and very risky nature of cryptocurrency trading.
“We urge consumers to remain vigilant and exercise utmost caution when dealing in DPT services, and to not deal with unregulated entities, including those based overseas,” added Mr Shin.
The MAS will implement these regulatory measures on DPT service providers via regulations and guidelines, which will run in phases beginning in mid-2024. That way, DPT service providers can buy more time to properly transition and efficiently implement the new measures.
Singapore has been very intentional about protecting its population from the brunt of the risky cryptocurrency market. Back in January 2022, the country banned its crypto service providers from publicly promoting their services or through third parties like social media influencers.
The rationale behind these restrictions is that cryptocurrency trading is highly risky and not suitable for everyone in the public, according to stakeholders in the Monetary Authority of Singapore.