Singapore requires crypto platforms to custody user assets through trusts, prohibits offering lending and pledging services to retail investors.

The Monetary Authority of Singapore (MAS) announced new cryptocurrency investor protection measures yesterday, requiring relevant platforms to safeguard user assets through trusts and prohibiting the provision of lending and pledging services to retail investors.

Singapore Calls for Further Enhancement of User Asset Security

According to the announcement from the Monetary Authority of Singapore (MAS), MAS has declared that Digital Payment Token (DPT) service providers are required to safeguard customer assets through statutory trusts, a measure that must be implemented by the end of the year. MAS stated that this regulation aims to reduce the risks of customer asset loss or misuse and facilitate the recovery of customer assets in the event of DPT service provider insolvency.

Additionally, MAS has imposed restrictions on lending and pledging services of cryptocurrencies to retail investors, citing unsuitability. However, DPT service providers can still offer such services to institutions and accredited investors.

Nevertheless, these regulations may be subject to adjustments in the future. MAS mentioned that during public consultations, suggestions were made to provide these services to retail investors with their consent and after adequate risk disclosure. MAS stated that it will continue to monitor market developments and consumer risk awareness to ensure that measures remain balanced and appropriate.

Crypto.com Becomes a DPT Payment Institution, Potentially Affected by Restrictions

In early June, Crypto.com announced that it had obtained a Major Payment Institution (MPI) license for Digital Payment Tokens (DPT) services issued by MAS. As a result, Crypto.com will also be subject to these regulatory restrictions.

Former Singapore Official: Requirements Less Stringent Than Hong Kong

According to a report by CoinDesk, former MAS regulator Angela Ang mentioned that the new restrictions in Singapore should not come as a surprise to those following the Singaporean market. She commended MAS for listening to industry feedback and considering practical aspects, which led to the postponement of certain proposals. For instance, there is no requirement for customer assets to be held in separate custody due to the current lack of third-party custodial services.

Angela Ang also noted that Singapore's requirements are not as stringent as those in Hong Kong. Singapore currently mandates that 90% of customer crypto assets be stored in cryptocurrency wallets, while Hong Kong requires 98%. Additionally, cold wallets do not need to be located within Singapore, unlike in Hong Kong.

Establishing Compliance Status and Global Expansion

For cryptocurrency operators in Hong Kong and Singapore, regulatory standards may not necessarily align with the local retail market. High compliance costs in domestic markets with limited population and business opportunities may not be economically viable.

Therefore, regulatory registrations in Hong Kong and Singapore are often sought by operators to obtain compliance status for global expansion or to attract institutional clients and serve professional investors.