Authorities in the Asian city-state claim that cryptocurrencies "have not passed the digital money test."
With the founder of FTX Sam Bankman-Frito facing the prospect of spending the next decades in prison (he will be formally sentenced in March), lawsuits filed In hundreds of courtrooms in dozens of territories, and in investigations launched by global regulators and criminal prosecution authorities, those old enough to remember the dotcom boom and bust of the late 20th and early 21st centuries will discover the chaos. surrounding cryptocurrencies. and exchanges that are familiar and daunting, but also completely predictable. When a poorly regulated market involving colossal sums of often untraceable money reaches a peak, financial misconduct is rarely far behind.
It is against this chaotic backdrop that Singapore plans to impose stricter regulations on cryptocurrency service providers in a move aimed at protecting retail customers from the risks and harms associated with trading crypto assets. Yesterday (November 23) Monetary Authority of Singapore (MAS), the country's financial regulator, said in a statement that it will introduce new measures to regulate the business conduct and consumer access of crypto service providers, also known as digital payment token (DPT) service providers. .
The measures will include prohibiting DPT service providers from accepting payments with locally issued credit cards, offering incentives to trade cryptocurrencies, and providing financing, margin or leverage transactions for retail clients. These restrictions are intended to limit retail clients' exposure and leverage to the highly volatile and speculative crypto market.
The regulator will also issue rules related to business conduct, such as requiring DPT service providers to publish policies, procedures and criteria governing the inclusion of a digital payment token and establish effective procedures to handle customer complaints and resolve disputes. .
"DPT service providers have an obligation to safeguard the interests of consumers who interact with their platforms and use their services," said Ho Hern Shin, deputy director general of financial supervision at the MAS.
"While these companies' conduct and consumer access measures can help achieve this goal," Ho continued, "they cannot insulate customers from losses associated with the inherently speculative and highly risky nature of cryptocurrency trading. ".
Ho added: โWe urge consumers to remain vigilant and exercise utmost caution when dealing with digital payment token services and not deal with unregulated entities, including those based overseas.โ
The MAS has confirmed that these new measures will come into force in phases from mid-2024. The regulator will also consult on additional measures to improve the anti-money laundering and anti-terrorist financing regime for DPT service providers.
Singapore has been one of the most progressive jurisdictions in regulating the crypto industry, having introduced a framework for licensing and supervising DPT service providers under the Payment Services Act, which came into effect in January. of 2020.
The regulator has since stepped up its oversight and enforcement actions on crypto companies, especially those targeting retail customers. In July, it ordered companies to safeguard client assets under a legal trust by the end of the year. MAS also restricts companies from facilitating loans or staking the assets of their retail customers.
In January 2022, Singapore banned crypto service providers from promoting their services in public areas or through third parties such as social media influencers. Crypto service providers can only market or advertise on their own corporate websites, mobile apps, or official social media accounts.
At the Singapore FinTech Festival 2023 last week, MAS managing director Ravi Menon said cryptocurrencies โhave not passed the digital money test,โ adding: โThey have performed poorly as a medium of exchange or deposit.โ of value. Prices are subject to strong speculative fluctuations. โMany investors in these cryptocurrencies have suffered significant losses.โ
Singapore's decision to tighten cryptocurrency rules comes amid a global regulatory crackdown on the cryptocurrency industry, as authorities around the world grapple with the challenges and opportunities posed by the sector. In the United Kingdom, the Financial Conduct Authority (FCA) has set rules for crypto companies providing services with digital tokens to be approved and registered for anti-money laundering regulations, while the government has announced its intention to strengthen rules for crypto trading platforms and create a robust regulatory regime.
The EU has also taken steps to regulate the market and on May 16 this year adopted the Markets in Crypto Assets Regulation (MiCA), a specific and comprehensive EU-wide framework that includes a licensing provision.
US authorities have also made progress, although they lag behind their EU and UK counterparts. He Treasury Department and the Internal Revenue Service (IRS) has released a proposed regulation on the sale and exchange of digital assets by brokers, but no timeline for legislation has been announced to date.
Photo: RDNA.
