Singapore tells crypto operators: act like grown up financial institutions
(2023/07/05)
- Reference: 1688538247
- News link: https://www.theregister.co.uk/2023/07/05/singapore_joins_nations_treating_crypto/
- Source link:
Singapore has joined the ranks of nations requiring digital payment operators to follow the same sort of regulations and customer protection requirements that apply to conventional financial institutions.
In measures floated in October 2022 and to be enacted by the end of 2023, Singapore's Monetary Authority (MAS) will require operators to hold customer assets under a statutory trust segregated from their own assets. Crypto outfits are also barred from facilitating retail customer lending and staking – the term for locking up crypto assets for a set time to support blockchain validation.
Operators will also be required to reconcile customer assets daily, keep proper records, maintain access and operational controls to customer digital payment tokens (DPTs) in Singapore, and provide risk disclosures.
[1]
MAS will not require the use of independent custodians for customer assets as long as the operator ensures operations of the assets are independent from other business units.
[2]
[3]
Operators can still facilitate staking for institutional and accredited investors while the MAS monitors market developments and risk.
"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 service provider's insolvency," [4]said MAS.
[5]
MAS is obviously referring to debacles such as the recent fall of Singapore-based Terraform Labs' so called "stablecoin" products that [6]deleted $42 billion of investors' funds, and the crash of companies like FTX.
FTX is a sore point for Singapore: the country's sovereign wealth fund, Temasek, was an [7]investor and took a bath when it cratered.
[8]Singapore struggles to curb cryptocurrency enthusiasm
[9]'All digital token transactions carry higher inherent risks': Singapore government
[10]Singapore's sovereign wealth fund regrets investment in crypto-villain FTX
[11]Hong Kong wants to be the world's home for virtual assets
The statutory body also warned that regulations alone cannot protect consumers, and advised utmost caution when trading in DPTs.
The move cements Singapore's distrust of digital assets. The city-state has [12]issued multiple warnings that the alterna-cash has inherently higher risks than other instruments.
In June, MAS chief fintech officer Sopnendu Mohanty [13]vowed Singapore would be "brutal and unrelentingly hard" on any crypto-related shenanigans.
[14]
Singapore is not alone in its stance. Last week, South Korea issued its own digital asset protections in the form of the [15]Virtual Asset Act . The act imposes a number of requirements, including that operators of digital asset platform hold assets to guarantee customers' balances in offline cold wallets and secure insurance against infosec incidents. Platforms cannot trade in their own digital assets and must follow a similar disclosure framework to capital markets.
Hong Kong also took steps toward further defining its crypto regulations last week when it [16]announced the establishment of its Task Force on Promoting Web3 Development.
The Special Administrative Region (SAR)'s financial secretary Paul Chan declared blockchain technology underpinning Web3 features has the "potential to solve many difficulties and pain points encountered in finance, trade, business operations and even day-to-day life."
"Premised on a balance between appropriate regulation and promoting development, Hong Kong seeks to lead and drive innovative exploration and development, create more new application models, and strives to draw together top-notch companies and talent in the arena to build a thriving ecosystem," said Chan.
Last October, Hong Kong [17]pushed a vision toward becoming a global virtual asset hub – an unusual move given that cryptocurrency is banned in China.
By February, the SAR's Securities and Futures Commission (SFC) [18]proposed measures that require virtual asset trading platform operators to acquire the same sort of licenses as securities traders. ®
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[4] https://www.mas.gov.sg/news/media-releases/2023/mas-publishes-investor-protection-measures-for-digital-payment-token-services
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_security/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZKU-Q1IkuHbgIaGndROkwgAAAM4&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[6] https://www.theregister.com/2022/05/17/terrausd_luna_crash/
[7] https://www.theregister.com/2023/05/30/temasek_ftx_chairman_investgitation/
[8] https://www.theregister.com/2022/08/30/singapore_struggles_to_taper_cryptocurrency/
[9] https://www.theregister.com/2022/04/06/singapore_digital_currency_regulation/
[10] https://www.theregister.com/2023/05/30/temasek_ftx_chairman_investgitation/
[11] https://www.theregister.com/2022/10/31/hong_kong_virtual_asset_hub_plan/
[12] https://www.theregister.com/2022/04/06/singapore_digital_currency_regulation/
[13] https://www.theregister.com/2022/06/27/singapore_cbdc_crypto_policy/
[14] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_security/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZKU-Q1IkuHbgIaGndROkwgAAAM4&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[15] https://www.theregister.com/2023/07/03/asia_tech_news_roundup/
[16] https://www.info.gov.hk/gia/general/202306/30/P2023063000579.htm
[17] https://www.theregister.com/2022/10/31/hong_kong_virtual_asset_hub_plan/
[18] https://www.theregister.com/2023/02/21/hong_kong_to_regulate_cryptocurrency/
[19] https://whitepapers.theregister.com/
In measures floated in October 2022 and to be enacted by the end of 2023, Singapore's Monetary Authority (MAS) will require operators to hold customer assets under a statutory trust segregated from their own assets. Crypto outfits are also barred from facilitating retail customer lending and staking – the term for locking up crypto assets for a set time to support blockchain validation.
Operators will also be required to reconcile customer assets daily, keep proper records, maintain access and operational controls to customer digital payment tokens (DPTs) in Singapore, and provide risk disclosures.
[1]
MAS will not require the use of independent custodians for customer assets as long as the operator ensures operations of the assets are independent from other business units.
[2]
[3]
Operators can still facilitate staking for institutional and accredited investors while the MAS monitors market developments and risk.
"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 service provider's insolvency," [4]said MAS.
[5]
MAS is obviously referring to debacles such as the recent fall of Singapore-based Terraform Labs' so called "stablecoin" products that [6]deleted $42 billion of investors' funds, and the crash of companies like FTX.
FTX is a sore point for Singapore: the country's sovereign wealth fund, Temasek, was an [7]investor and took a bath when it cratered.
[8]Singapore struggles to curb cryptocurrency enthusiasm
[9]'All digital token transactions carry higher inherent risks': Singapore government
[10]Singapore's sovereign wealth fund regrets investment in crypto-villain FTX
[11]Hong Kong wants to be the world's home for virtual assets
The statutory body also warned that regulations alone cannot protect consumers, and advised utmost caution when trading in DPTs.
The move cements Singapore's distrust of digital assets. The city-state has [12]issued multiple warnings that the alterna-cash has inherently higher risks than other instruments.
In June, MAS chief fintech officer Sopnendu Mohanty [13]vowed Singapore would be "brutal and unrelentingly hard" on any crypto-related shenanigans.
[14]
Singapore is not alone in its stance. Last week, South Korea issued its own digital asset protections in the form of the [15]Virtual Asset Act . The act imposes a number of requirements, including that operators of digital asset platform hold assets to guarantee customers' balances in offline cold wallets and secure insurance against infosec incidents. Platforms cannot trade in their own digital assets and must follow a similar disclosure framework to capital markets.
Hong Kong also took steps toward further defining its crypto regulations last week when it [16]announced the establishment of its Task Force on Promoting Web3 Development.
The Special Administrative Region (SAR)'s financial secretary Paul Chan declared blockchain technology underpinning Web3 features has the "potential to solve many difficulties and pain points encountered in finance, trade, business operations and even day-to-day life."
"Premised on a balance between appropriate regulation and promoting development, Hong Kong seeks to lead and drive innovative exploration and development, create more new application models, and strives to draw together top-notch companies and talent in the arena to build a thriving ecosystem," said Chan.
Last October, Hong Kong [17]pushed a vision toward becoming a global virtual asset hub – an unusual move given that cryptocurrency is banned in China.
By February, the SAR's Securities and Futures Commission (SFC) [18]proposed measures that require virtual asset trading platform operators to acquire the same sort of licenses as securities traders. ®
Get our [19]Tech Resources
[1] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_security/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2ZKU-Q1IkuHbgIaGndROkwgAAAM4&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
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[4] https://www.mas.gov.sg/news/media-releases/2023/mas-publishes-investor-protection-measures-for-digital-payment-token-services
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_security/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZKU-Q1IkuHbgIaGndROkwgAAAM4&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[6] https://www.theregister.com/2022/05/17/terrausd_luna_crash/
[7] https://www.theregister.com/2023/05/30/temasek_ftx_chairman_investgitation/
[8] https://www.theregister.com/2022/08/30/singapore_struggles_to_taper_cryptocurrency/
[9] https://www.theregister.com/2022/04/06/singapore_digital_currency_regulation/
[10] https://www.theregister.com/2023/05/30/temasek_ftx_chairman_investgitation/
[11] https://www.theregister.com/2022/10/31/hong_kong_virtual_asset_hub_plan/
[12] https://www.theregister.com/2022/04/06/singapore_digital_currency_regulation/
[13] https://www.theregister.com/2022/06/27/singapore_cbdc_crypto_policy/
[14] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_security/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZKU-Q1IkuHbgIaGndROkwgAAAM4&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[15] https://www.theregister.com/2023/07/03/asia_tech_news_roundup/
[16] https://www.info.gov.hk/gia/general/202306/30/P2023063000579.htm
[17] https://www.theregister.com/2022/10/31/hong_kong_virtual_asset_hub_plan/
[18] https://www.theregister.com/2023/02/21/hong_kong_to_regulate_cryptocurrency/
[19] https://whitepapers.theregister.com/
tony72
"The move cements Singapore's distrust of digital assets."
Does it now? Since they're simply making crypto companies obey the same rules as regular financial institutions, does that mean the rules also indicate "distrust" of regular finance?
Seems to me that implementing sensible and strict crypto regulations is actually essential for the industry to thrive, so I don't see it as indicative of distrust, it's just a recognition that the industry badly needs such regulation.
Anonymous Coward
Regulation is not enough, it also needs competent and active enforcement - I've seen in Malta what happens when that isn't the case.
That said, draconian as I find it, quite a few financial executives could do with the threat of being physically whipped if they misbehave instead of getting a bailout by the taxpayer and then still receiving a bonus. I think it would clean up the industry considerably.
Filippo
> blockchain technology underpinning Web3 features has the "potential to solve many difficulties and pain points encountered in finance, trade, business operations and even day-to-day life."
"Many difficulties and pain points", and yet not even one of them is explicitly pointed out.
Why the tip-toe ?
Pascal Monett
Just make them sign a banking charter. Job done.
They want to deal in finance ? They obey the rules of finance.
Act like gown up financial institutions
SnailFerrous
Translated as:
Where a suit, not a hoodie when fleecing your customers.
Paul Chan declared blockchain technology underpinning Web3 features has the "potential to solve many difficulties and pain points encountered in finance, trade, business operations and even day-to-day life.
The blockchain snake-oil business is clearly still very strong in Hong Kong.