Singapore is poised to enact stricter regulations for crypto service providers, aiming to bolster consumer protection and mitigate the risks associated with cryptocurrency trading. The Monetary Authority of Singapore (MAS) has put forth a series of measures designed to govern the conduct of businesses and restrict consumer access to certain crypto-related services, as reported by CNBC.com.
The proposed regulations encompass several key provisions, including the prohibition of 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 pertaining to business conduct, mandating providers to disclose policies, procedures, and criteria governing the listing of digital payment tokens.
These measures seek to establish effective mechanisms for handling customer complaints and resolving disputes, with the final steps expected to be phased in gradually from mid-2024 onwards.
According to Ho Hern Shin, MAS's Deputy Managing Director of Financial Supervision, crypto service providers bear a responsibility to safeguard the interests of consumers engaging with their platforms. However, he underscored that these measures alone cannot fully shield customers from losses inherent in 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 consistently warned about the substantial risks associated with crypto trading, citing the volatility and speculative characteristics of crypto assets. The enactment of the Payment Services Act in January 2020 marked Singapore's initial move toward regulating payment services and crypto service providers. Since then, Singapore has ramped up its oversight of crypto companies.
In July, the government mandated companies to custody customer assets under the law by year-end. MAS also imposed restrictions on firms from facilitating borrowing or staking of retail customer assets.
In January 2022, Singapore prohibited crypto service providers from advertising their services in public spaces or through third parties such as social media influencers. Providers are only permitted to advertise on their company websites, mobile apps, or official social media accounts.
Speaking at the Singapore FinTech Festival 2023, 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 cryptocurrencies have suffered significant losses," said Menon.
As Singapore fortifies its regulatory framework for crypto transactions, investors must remain informed about the evolving landscape and exercise caution when participating in crypto-related activities. Compliance with regulatory requirements and exercising due diligence in selecting reputable and regulated service providers are critical steps for safely navigating the crypto market.