Singapore is set to implement stricter regulations for crypto service providers, aiming to enhance consumer protection and mitigate risks associated with cryptocurrency trading. The Monetary Authority of Singapore (MAS) has proposed measures to regulate the behavior of businesses and limit consumer access to certain crypto-related services, as reported by CNBC.com.
The proposed regulations include prohibiting crypto service providers in Singapore from accepting locally issued credit card payments, offering incentives for crypto trading, and providing financing transactions, margin trading, or leverage for retail customers. Additionally, regulators will introduce rules regarding business conduct, such as requiring providers to disclose policies, procedures, and criteria governing the listing of digital payment tokens.
These measures aim to establish effective procedures for handling customer complaints and resolving disputes, with the final steps expected to be implemented gradually from mid-2024 onwards.
According to Ho Hern Shin, MAS's Deputy Managing Director of Financial Supervision, crypto service providers have a duty to safeguard the interests of consumers interacting with their platforms. However, he emphasized that these measures cannot fully protect customers from losses associated with the speculative and high-risk nature of crypto trading.
"We urge consumers to remain vigilant and exercise caution when transacting with digital payment token services and avoid dealing with unregulated entities, including those based overseas," added Ho.
MAS has repeatedly warned about the high risks associated with crypto trading, highlighting the volatility and speculative nature of crypto assets. The Payment Services Act, enacted in January 2020, marked Singapore's first step in regulating payment services and crypto service providers. Since then, Singapore has intensified its oversight of crypto companies.
In July, the government mandated companies to custody customer assets under the law by the end of the year. MAS also restricted firms from facilitating borrowing or staking of retail customer assets.
In January 2022, Singapore banned crypto service providers from promoting their services in public spaces or through third parties such as social media influencers. Providers can only advertise on their company websites, mobile apps, or official social media accounts.
Speaking at the Singapore FinTech Festival 2023 last week, MAS's Managing Director Ravi Menon remarked that cryptocurrencies have failed as digital currencies.
"They perform poorly as a medium of exchange or store of value. Prices are subject to sharp speculative changes. Many investors in these crypto currencies have suffered significant losses," said Menon.
As Singapore strengthens its regulatory framework for crypto transactions, investors need to stay informed about the evolving landscape and exercise caution when engaging in crypto-related activities. Compliance with regulatory requirements and due diligence in selecting reputable and regulated service providers are essential steps for navigating the crypto market safely.