The Monetary Authority of Singapore (MAS) has rolled out augmented regulations aimed at shielding retail crypto users from potential risks in the growing industry.

MAS directives compel Digital Payment Token (DPT) service providers to deter retail customers from speculative crypto activities, such as rejecting credit card payments and eliminating trading incentives.

Balancing Protection and Development

MAS requires these providers to abstain from financing, margin, or leverage transactions, assessing customer risk awareness and restricting crypto asset valuations in determining net worth.

Source: MAS Nov. 23 Statement

The regulator underscores the need for robust critical systems, aligning with financial institutions' stringent requirements.

Addressing Conflicts and Enhancing Transparency

Alongside discouraging speculative activities, MAS mandates DPTs to actively identify, mitigate, and disclose conflicts of interest. Service providers must publicly outline policies governing digital asset listings, and establish effective protocols for customer complaints and dispute resolution.

Introduced after soliciting feedback on proposals from the prior year, these measures are set to phase in gradually from mid-2024.

Ho Hern Shin, MAS deputy managing director, acknowledges that while these steps safeguard consumers, they can't fully shield against losses inherent in crypto's speculative and risky nature.

Regulation vs. Innovation

MAS's proactive approach follows the fallout of crypto-related firm collapses, recognising the impact on citizens. However, critics argue that stringent regulations may stifle innovation, potentially hindering Singapore's ambition to become a crypto hub.

The outright rejection of credit card payments and strict trading restrictions pose challenges to fostering a vibrant crypto ecosystem.