New requirements published for DPT service providers
It will mitigate the risk of loss or misuse of customers’ assets.
Singapore’s central bank declared new requirements for digital payment token (DPT) service providers to ensure customer assets under statutory trust before the year ends.
It will facilitate the recovery of customers’ assets in case a DPT service provider encounters insolvency, the Monetary Authority of Singapore (MAS) said.
MAS will also limit DPT service providers from facilitating lending and staking of DPT tokens by their retail customers.
Also, MAS said the new requirements were also conducted from a consultation with DPT service providers.
The consultation received significant interest from a wide range of respondents, with broad support for DPT service providers to:
• segregate customers’ assets from its own assets and held in trust;
• safeguard customers’ moneys;
• conduct daily reconciliation of customers’ assets and keep proper books and records;
• maintain access and operational controls to customers’ DPTs in Singapore;
• ensure that the custody function is operationally independent from other business units; and
• provide clear disclosures to customers on the risks involved in having their assets held by the DPT service provider.
MAS now seeks public feedback on the draft legislative amendments to the Payment Services Regulations here to implement the requirements.
MAS will also publish guidelines in due course to support consistent implementation by the industry.
Further, MAS will “proceed with the proposal to restrict DPT service providers from facilitating lending or staking of their retail customers’ DPTs, as these activities are generally not suitable for retail public.”
“DPT service providers may continue to facilitate such activities for their institutional and accredited investors. There were diverse views received on this proposal,” the central bank said.
As a reminder, MAS told the public that regulations alone cannot shield consumers from all losses, given the extremely high risk and speculative nature of DPT trading.
“Consumers must continue to exercise utmost caution when trading in DPTs as they may lose their assets,” said MAS.