In Singapore, cryptocurrencies are generally regulated as digital payment tokens (“DPTs“) under the Payment Services Act 2019 (“PS Act“). Currently, DPT service providers (“DPTSPs“) are regulated under the PS Act primarily for anti-money laundering and countering the financing of terrorism (AML/CFT) risks, and technology and cyber risks.
To reduce the risk of consumer harm in cryptocurrency trading, in October 2022, MAS issued the Consultation Paper on Proposed Regulatory Measures for Digital Payment Token Services to seek comments on its proposals, among other things, to introduce consumer access measures for retail customers of DPTSPs, business conduct measures and enhanced measures to manage technology and cyber risks for DPTSPs.
On 23 November 2023, MAS issued Part 2 of its response to feedback received on the proposals in the Consultation Paper that relate to consumer access, business conduct and management of technology and cyber risks by DPTSPs (“Part 2 Response“). This follows the earlier publication in July 2023 of Part 1 of MAS’ response to feedback received on regulatory measures concerning segregation and custody of assets of customers of DPTSPs, prohibition against the lending and staking of retail customers’ assets by DPTSPs, and prevention and detection of market abuse and unfair trading practices in the dealing of DPTs. This Update provides a summary of the regulatory measures addressed in Part 2 Response concerning: consumer access measures for retail investors of DPTSPs; business conduct measures relating to the management of conflict of interests, complaints handling and dispute resolutions with customers; and mandating the requirements in the MAS Notice of Technology Risk Management applicable to the other financial institutions to DPTSPs.
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