Digital Payment Token (DPT) service providers will have to segregate customers’ assets from its own assets and safekeep it under a statutory trust before the end of the year, according to several new requirements laid out by the Monetary Authority of Singapore (MAS).
Additionally, they will need to ensure that the custody function is operationally independent from other business units.
This will mitigate the risk of loss or misuse of customers’ assets, and facilitate the recovery of customers’ assets in the event of a DPT service provider’s insolvency.
The move comes at a time where former insiders from the beleaguered crypto exchange Binance said that the firm of co-mingling its customer funds and company revenue.
The now-defunct FTX’s disgraced former CEO Sam Bankman-Fried, who is now facing criminal charges, claimed to have “unknowingly” co-mingling its customers’ assets with his trading firm Alameda.
MAS will also be restricting DPT service providers from facilitating lending and staking of DPT tokens by their retail customers.
DPT service providers will also need to conduct daily reconciliation of customers’ assets and keep proper books and records as well as maintain access and operational controls to customers’ DPTs in Singapore.
MAS also stressed that they will have to provide clear disclosures to customers on the risks involved in having their assets held by the DPT service provider.
These measures are introduced following an October 2022 public consultation on regulatory measures to enhance investor protection and market integrity in DPT services.
MAS is also now seeking public feedback on the draft legislative amendments to the Payment Services Regulations to put these requirements into effect.
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- Source: https://fintechnews.sg/75771/crypto/mas-says-crypto-firms-must-segregate-customers-assets-in-a-trust-by-end-2023/
