Singapore’s central bank and integrated financial regulator — the Monetary Authority of Singapore (MAS) — has announced new requirements for Digital Payment Token (DPT) service providers to safe keep customer assets under a statutory trust by the end of the year.
The move aims to mitigate the risk of loss or misuse of customers’ assets and facilitate the recovery of these assets in the event of a DPT service provider’s insolvency.
“A digital payment token is any cryptographically-secured digital representation of value that is used or intended to be used as a medium of exchange. This new payment method replaces sensitive debit or credit card data with a unique identification code called a ‘token,’ which is used during a digital transaction,” said Benzinga.
MAS will also restrict DPT service providers from facilitating lending and staking of DPT tokens by their retail customers.
These measures follow a public consultation in October 2022 on regulatory measures to enhance investor protection and market integrity in DPT services. The consultation received significant interest from a wide range of respondents. There was broad support for DPT service providers to segregate customers’ assets from their own assets in order to safeguard customers’ money.
“MAS is now seeking public feedback on the draft legislative amendments to the Payment Services Regulations to put these requirements into effect. It will also publish guidelines and restrict DPT service providers from facilitating lending or staking of their retail customers’ DPTs, as these activities are generally not suitable for the retail public,” said Benzinga.
DPT service providers may continue to facilitate such activities for their institutional and accredited investors.
MAS also consulted on the broad regulatory approach to market integrity in the October 2022 public consultation. Most respondents agreed with MAS’ observations on good industry practices to address market integrity risks, and some respondents suggested that MAS should impose further measures to prevent market and abuse and unfair trading practices.
Produced in association with Benzinga
Edited by Nalova Akua and Judy J. Rotich