Crypto firms will have to comply with the new regulations of moving customer assets to trust accounts before the end of the year.
Singapore’s regulator, the Monetary Authority of Singapore (MAS), has announced new measures aimed at safeguarding customers’ assets held by digital asset firms. Under the new rules set to take effect later this year, licensed firms will be required to segregate customers’ assets from their own and hold them on trust. Customer assets must be deposited in trust accounts with Singaporean financial institutions to facilitate recovery in case of insolvency.
Under the new regulations that are expected to take effect later this year, crypto firms will have to conduct daily reconciliation of customers’ assets, keep proper records, and maintain access and operational controls of the digital assets of customers in Singapore.
While independent custodians are not mandated at present due to their limited availability, custody functions must be operationally independent and crypto firms will have to provide clear disclosures to customers about the associated risks.
MAS will also prohibit lending or staking activities for retail customers, but institutional and accredited investors are allowed to do so. The act of staking digital assets include adding their transactions to a network to earn more of the same tokens as a reward, while lending involves loaning assets to other institutions to earn interest; in this case, the assets of retail users.
The measures have supposedly received broad support which is part of MAS’s efforts to protect retail investors and enhance the quality of Singapore’s digital asset ecosystem. Public feedback is being sought, and the requirements are expected to be implemented by October.