Crypto Digital Assets

MAS Tightens Crypto Trading Rules, Credit Card Payments No Longer Allowed

The Monetary Authority of Singapore (MAS) has instructed Digital Payment Token (DPT) service providers to cease accepting locally issued credit card payments in a move to limit cryptocurrency speculation among retail customers.

This directive is a critical part of MAS’ comprehensive strategy to enhance consumer protection and manage potential risks in the digital currency sector.

The MAS’ recent publication of its final tranche of responses to feedback on proposed DPT regulations marks a significant development in this area.

The proposed regulations, aimed at limiting potential consumer harm, include a range of measures focusing on business conduct and technology and cyber risk management.

For business conduct, DPT providers are expected to identify and disclose conflicts of interest, establish transparent policies for listing DPTs, and implement effective systems for addressing customer complaints and disputes.

In addition to not accepting credit card payments, other consumer access measures include assessing customers’ risk awareness, avoiding trading incentives, not offering financing or leverage options, and carefully considering cryptocurrency values in customer net worth assessments.

Regarding technology and cyber risk, MAS requires DPT service providers to maintain high system availability and recovery capabilities, aligning with current standards for financial institutions.

MAS also urged consumers to remain vigilant and exercise utmost caution when dealing in DPT services, and to not deal with unregulated entities, including those based overseas.

These regulatory measures, which include both regulations and guidelines, are set to be implemented in phases starting from mid-2024.

This phased approach will provide DPT service providers with sufficient time to adapt to the new requirements.

Further details on responses to the public consultation are available here.

Lasanka Perera

Lasanka Perera, CEO of Independent Reserve Singapore, one of the first licensed DPT service providers, welcomed the new guidelines. He added,

“These measures aim to address potential harm to consumers and to ensure the safety of individuals engaging in cryptocurrency trading. We believe that these guidelines are a positive step towards fostering a more responsible and regulated cryptocurrency industry in Singapore.

The new approach towards assessing accredited investors’ net worth, which includes digital payment tokens, reflects a progressive integration into traditional financial systems. We are optimistic about the long-term impact and efficacy of these regulations towards fostering a secure and reliable crypto market.

Ho Hern Shin

Ho Hern Shin, Deputy Managing Director (Financial Supervision), MAS, said,

“DPT service providers have the obligation to safeguard the interests of consumers who interact with their platforms and use their services.

While these business conduct and consumer access measures can help meet this objective, they cannot insulate customers from losses associated with the inherently speculative and highly risky nature of cryptocurrency trading.”