Singapore’s MAS bans crypto lending and staking services for retail customers

Rick Steves

The Singapore regulator admitted there were diverse views received on this proposal, with some respondents suggesting allowing DPT service providers to offer these activities with the retail customer’s consent and risk disclosures, while others advocated a ban on these high-risk and speculative activities.

The Monetary Authority of Singapore (MAS) has announced it is banning crypto lending and staking for retail users and will require Digital Payment Token (DPT) service providers to safe keep customer assets under a statutory trust before the end of the year.

Such safekeeping is expected to mitigate the risk of loss or misuse of customers’ assets and facilitate the recovery of customers’ assets in the event of a DPT service provider’s insolvency, the regulator argues.

While the segregation and custody requirements will minimize the risk of loss of customers’ assets, consumers may still face significant delays in recovering their assets in the event of insolvency of the service providers, said MAS, adding that consumers must also remain vigilant and not deal with unregulated entities, including those based overseas, as they risk losing all their assets.

Crypto staking and lending “are generally not suitable for the retail public”

DPT service providers will also be restricted from facilitating lending and staking of DPT tokens by their retail customers as these activities are generally not suitable for the retail public, MAS continued, while noting that DPT service providers may continue to facilitate such activities for their institutional and accredited investors.

The Singapore regulator admitted there were diverse views received on this proposal, with some respondents suggesting allowing DPT service providers to offer these activities with the retail customer’s consent and risk disclosures, while others advocated a ban on these high-risk and speculative activities.

MAS said it will monitor market developments and consumer risk awareness as these evolve and will take steps to ensure that our measures remain balanced and appropriate.

An October 2022 public consultation on regulatory measures to enhance investor protection and market integrity in DPT services found broad support for DPT service providers to:

  • segregate customers’ assets from its own assets and held in trust;
  • safeguard customers’ moneys;
  • conduct daily reconciliation of customers’ assets and keep proper books and records;
  • maintain access and operational controls to customers’ DPTs in Singapore;
  • ensure that the custody function is operationally independent from other business units; and
  • provide clear disclosures to customers on the risks involved in having their assets held by the DPT service provider.

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