Singapore MAS proposes to ban cryptocurrency credits
The Monetary Authority of Singapore (MAS) is introducing proposals to better regulate the cryptocurrency industry in the aftermath of the bankruptcy of the Singaporean crypto hedge fund Three Arrows Capital (3AC).
The central bank of Singapore has issued two consultation papers on proposals for regulating the operations of digital payment token service providers (DPTSP) and stablecoin issuers under the Payment Services Act.
Published on Oct. 26, both consultation papers aim to reduce risks to consumers from crypto trading and improve standards of stablecoin-related transactions.
The first document includes proposals for digital payment token (DPT) services or services related to major cryptocurrencies like Bitcoin (BTC), Ether (ETH) or XRP (XRP).
According to the authority, “any form of credit or leverage in the trading of DPTs” would result in the “magnification of losses,” potentially leading to bigger losses than a customer’s investment.
In the section 3.20, MAS proposed to ban DPTSPs from providing retail customers with “any credit facility,” whether in the form of fiat currencies or crypto. According to the regulator, crypto service providers should also not be allowed to accept any deposits made using credit cards in exchange for crypto services.
“MAS proposes that DPTSPs should ensure that customers’ assets are segregated from the DPTSPs’ own assets, and held for the benefit of the customer,” the central bank noted, referring to the recent failure of several firm in the crypto industry, including 3AC’s insolvency in June.
Other than that, the MAS also suggested that DPTSPs should consider adopting consumer tests to assess retail customer’s knowledge of risks associated with crypto.
The second consultation paper provides
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