23 February, 2024

MAS Orders Crypto Firms to Secure Customer Assets in Trust by Year-End

8 months ago

11 Dec, 2023

In a significant move to enhance investor protection, the Monetary Authority of Singapore (MAS) has mandated that all cryptocurrency service providers operating within its jurisdiction must deposit customer assets under a statutory trust by the end of the year. This announcement follows a public consultation initiated in October 2022 aimed at bolstering customer protection.

Explaining the move, the MAS said in the announcement:

This will mitigate the risk of loss or misuse of customers’ assets and facilitate the recovery of customers’ assets in the event of a DPT (Digital Payment Token or Cryptocurrency) service provider’s insolvency.

In addition to this, the MAS has imposed restrictions on cryptocurrency service providers, prohibiting them from facilitating lending and staking tokens to retail customers. However, institutional and accredited investors would continue to have access to these services.

Furthermore, the central bank is also seeking public feedback on legislative amendments with the aim of implementing these new requirements. Angela Ang, Senior Policy Advisor for blockchain intelligence firm TRM Labs and former MAS regulator, commented on the development, stating,

MAS’ decision to hold back on certain proposals, such as requiring an independent custodian for customer assets, shows it’s listening to the industry and is sensitive to practical considerations such as a dearth of third-party custodians.

Ang further noted that Singapore’s requirements are in line with those of other payment service providers and are not as stringent as those in Hong Kong. Unlike Hong Kong, which requires 98% of customer crypto to be held in crypto wallets, Singapore only requires 90%, and there is no requirement for cold wallets to be onshore.

The MAS has also indicated that its stance on prohibiting crypto entities from facilitating lending and staking of tokens for retail customers could change in the future. The authority added it would monitor market developments and consumer risk awareness as these evolve and would take steps to ensure that our measures remain balanced and appropriate.