Starting in mid-2024, all retail consumers using locally regulated digital payment token service providers (DPTSPs) in Singapore, including foreign customers, will be subject to new regulatory measures designed to protect consumer interests, as announced by the Monetary Authority of Singapore (MAS) on November 23, 2023.

The updated regulations stipulate that DPTSPs, which include cryptocurrency exchanges and trading firms, must evaluate whether retail customers possess adequate knowledge of the risks associated with their services. Additionally, these providers will need to identify and mitigate any conflicts of interest, especially if they engage in both in-house trading and exchange services.

Key provisions of the regulations include:

A ban on lending or staking activities involving retail customers’ assets.
Prohibition of leverage options for retail clients.
Restrictions against offering incentives to retail customers.
Requirements to publish token listings and governance policies.
A ban on credit card payments, aimed at reducing easy access to debt financing for cryptocurrency purchases, although this applies only to locally issued cards. Foreign-issued credit cards will still be accepted to accommodate foreign retail customers who may have limited payment options.
Accredited or institutional investors will be exempt from these regulations. The MAS defines accredited investors as individuals with over S$2 million in net personal assets (with certain caps) or more than S$1 million in net financial assets, among other criteria. It should be noted that the assessment of an individual’s accredited investor status will not apply to MAS-regulated stablecoins.

The new measures build upon previous amendments to the Payment Services Regulations, which require DPTSPs to:

Segregate customer assets from the provider’s own assets.
Hold customer assets in trust.
Conduct daily reconciliations of customer assets.
Maintain access and operational controls over customers’ digital payment tokens within Singapore.
Ho Hern Shin, deputy managing director for financial supervision at MAS, emphasized that while these measures aim to protect consumers, they cannot eliminate the risks associated with cryptocurrency trading, which is known for its speculative nature. She urged consumers to remain cautious and avoid dealings with unregulated entities, particularly those based overseas.