After the failure of the Singaporean cryptocurrency hedge fund Three Arrows Capital, the Monetary Authority of Singapore (MAS) is proposing ways to improve the way the country regulates the cryptocurrency business.
The Monetary Authority of Singapore (MAS) has put out two consultation papers about possible changes to the Payment Services Act that will regulate the business practices of Digital Payment Token Service Providers (DPTSP) and stablecoin issuers, respectively.
Both of these consultation papers came out on October 26, and their goals were to make cryptocurrency trading less dangerous for consumers and raise the bar for the quality of transactions that use stablecoins.
According to the authorities, “any form of credit or leverage in the trading of DPTs” would result in the “magnification of losses,” which could potentially lead to bigger losses than a customer’s investment. The first document includes proposals for digital payment token (DPT) services or services related to major cryptocurrencies like Bitcoin.
In section 3.20, the MAS made a proposal to prohibit DPTSPs from offering retail consumers “any credit facility,” regardless of whether the facility is denominated in fiat currencies or cryptocurrencies. According to the authorities, crypto service providers shouldn’t be permitted to take deposits made using credit cards in return for cryptographic services. This recommendation comes from the regulatory body.
The second consultation paper offers some suggestions for an approach to the regulation of stablecoins in Singapore. These suggestions include a set of commercial and operational standards that issuers of stablecoins will need to meet.
In section 4.21 of the document, the MAS made a proposal to restrict stablecoin issuers from lending or staking single-currency pegged stablecoins (SCS), as well as lending or trading other cryptocurrencies. This was in addition to the current restrictions that prohibit stablecoin issuers from lending or trading other cryptocurrencies.
In addition to this, the regulatory body advocated the establishment of a minimum base capital equal to one million dollars or fifty percent of the annual operational expenditures of the SCS issuer. The MAS said that the capital should be maintained at all times and should comprise liquid assets.
About Monetary Authority of Singapore (MAS):
The Monetary Authority of Singapore (MAS) serves as both the country’s central bank and its authority in charge of financial regulation. It is responsible for the administration of the many laws that apply to money, banking, insurance, securities, and the financial sector in general. Additionally, it is in charge of the issue of currency.
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