Singapore Tightens Grip on Crypto: New Regulations to Safeguard Consumers

Singapore's financial authority has announced stricter regulations for cryptocurrency service providers in response to feedback on proposed rules. The Monetary Authority of Singapore (MAS) stated that the new measures aim to limit potential consumer harm through business conduct and consumer access restrictions.

Starting in mid-2024, the finalized measures will include prohibiting crypto service providers from accepting locally issued credit card payments, offering incentives for cryptocurrency trading, and providing financing, margin, or leverage transactions for retail customers. The MAS emphasized the obligation of digital payment token (DPT) service providers to protect consumer interests while acknowledging the inherent speculative and risky nature of cryptocurrency trading.

To enhance business conduct, the regulator will mandate crypto service providers to publish policies, procedures, and criteria governing the listing of digital payment tokens. Additionally, effective procedures for handling customer complaints and resolving disputes will be required.

Ho Hern Shin, Deputy Managing Director of Financial Supervision at MAS, urged consumers to exercise caution and vigilance when dealing with digital payment token services, avoiding unregulated entities, including those based overseas.

The Payment Services Act, implemented in January 2020, serves as a regulatory framework for payment services and the provision of crypto services to the public. Over time, Singapore has increased its oversight of crypto firms, requiring them to safeguard customer assets under a statutory trust by the end of the year. MAS also restricts firms from facilitating lending or staking of retail customers' assets.

In January 2022, Singapore banned crypto service providers from promoting their services in public areas or through third parties like social media influencers. Marketing and advertising are now limited to corporate websites, mobile applications, and official social media accounts.

During the Singapore FinTech Festival 2023, MAS Managing Director Ravi Menon asserted that cryptocurrencies have "failed the test of digital money." Menon highlighted their poor performance as a medium of exchange or store of value, citing sharp speculative swings in prices and significant losses for many cryptocurrency investors.