The Monetary Authority of Singapore (MAS) has issued a new set of guidelines in his characteristic manner of controlling the risks inherent in the crypto industry for retail consumers.

The MAS said that digital payment token (DPT) service providers should not issue any type of credit facility to consumers that could facilitate their trading of digital currencies in Singapore.

The guidelines were detailed as MAS released two consultation documents as it sought industry guidance on how best to protect consumers from risk, while also allowing innovations in the space to grow.

The MAS recognized that banning digital currencies is no longer an option as they play a very important role in the broader digital asset ecosystem. Therefore, it noted that it will be in the best interest of all stakeholders for DPT service providers to provide such robust risk disclosure to consumers to enable them to gauge their risk exposures.

“The two sets of proposed measures mark the next milestone in enhancing Singapore’s regulatory approach to fostering an innovative and responsible digital asset ecosystem. Regulations go hand in hand with innovation in financial services,” said Ms. Ho Hern Shin, Deputy Managing Director (Financial Supervision), MAS,

“The enhanced regulatory regime for stablecoins is intended to support the development of value-added payment use cases for stablecoins in Singapore. As we continue to partner with industry players to explore the potential benefits of tokenization and distributed ledger technology, MAS will make appropriate adjustments to its regulatory regime to address associated risks.”

Under its guideline for stablecoins, the MAS requires issuers to hold an adequate reserve that will be dominated by the Singapore dollar by disclosing the swap modalities and rights held by holders.

The MAS has played a frontline role in regulating the crypto industry, and despite its efforts, indigenous companies like the Vauld Group continues to collapse. In the published guideline, the regulator said its role may not necessarily protect consumers and as such consumers should approach the industry with the utmost caution.

Image Source: Shutterstock