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Asia’s cryptocurrency hub Singapore and neighboring Thailand announced new directives on the handling of digital assets in two announcements on July 3.

Six new requirements for cryptocurrency businesses in Singapore

Monetary Authority of Singapore (MAS) issued Six new requirements for crypto companies to protect crypto investors. In addition to the new rules, MAS has banned exchanges from offering lending and staking services to individual users.

Lending and staking are “generally not suitable” for retail investors, MAS said. However, the central bank said the exchange could continue to offer lending and staking services to institutional and accredited investors.

In the new rules, MAS has instructed exchanges to separate user assets from business assets and to store user assets in legal trusts.

The Central Bank noted that:

“this [depositing user assets in a trust] Reduce the risk of loss or misuse of customer assets and facilitate recovery of customer assets in the event of a DPT. [digital payment token] Bankruptcy of service providers. ”

City-state registered exchanges will have to comply with the new rules by the end of the year.

New guidelines require cryptocurrency exchanges to separate their custody business from other divisions. This ensures that the custodial function is “operationally independent” from the various business units and isolated from the associated risks.

The new rule stipulates that cryptocurrency service providers must ensure the safety of user funds, reconcile user funds daily and maintain proper records. More importantly, exchanges need to ensure that their customers’ access to and operational control of their digital assets remains within Singapore. Financial regulators are also asking for clear risk disclosures from exchanges.

according to report Citing unnamed sources, the Straits Times reported that while the rule came as no surprise, industry insiders in Singapore had hoped for more maneuvers.

More rules coming

The MAS’s new rules have been enacted after receiving public input during a consultation on enhanced investor protection that began in October 2022. MAS is seeking feedback on the draft amendments to the Payment Services Regulations to incorporate the new requirements.

In addition, MAS launched another consultancy paper Today we will discuss the introduction of further requirements for cryptocurrency businesses to curb unfair trading practices. The report sheds light on the legal provisions and the types of fraudulent activities that are considered criminal, such as market manipulation or manipulation.

Requirements set forth in this document include active monitoring to detect unfair trade practices, careful handling of confidential information, and maintenance of policies regarding personal trading by employees.

danger warning again

MAS reiterated its warning to the public to remain vigilant against the risks of cryptocurrencies. The central bank said that while the new rules would “minimize” the risk of losing user assets, users would still face “substantial delays” in recovering their assets in the event of bankruptcy.

It states:

“MAS reminds the public that regulation alone cannot protect consumers from all losses, given the extremely high risk and speculative nature of DPT trading.”

Therefore, investors should “exercise extreme caution” when trading cryptocurrencies. As stated by MAS, assets may be lost completely. The central bank added that investors should not trade with unregistered domestic and international exchanges to avoid cryptocurrency losses.

Thailand’s new directive on digital assets

The Thai Securities and Exchange Commission also made a new announcement. guidelines We are focused on increasing transparency and reducing risk in the digital asset sector. Regulators have established clear standards for disclosure of risk warnings by digital currency operators and introduced bans on certain services.

According to the commission, the new measures are aimed at enhancing investor protection and ensuring that traders are well informed about the inherent risks associated with digital currencies. Following meetings in September and December 2022, and again in May 2023, the Commission approved resolutions setting out risk disclosure requirements and bans on certain services.

The new regulations expressly prohibit digital asset companies from accepting digital currencies or using deposit assets for lending or investment purposes while promising a return to depositors.

The guidelines also target staking by prohibiting the offering of profits from depositing digital assets unless they fall under promotional activities as defined by Thai SEC regulations. Further, companies are not permitted to advertise such services or persuade the public to participate in such services.

In a further regulatory development in the Asian market, on Friday, June 30, the South Korean National Assembly passed the Virtual Asset User Protection Act. This is a comprehensive law that combines 19 cryptocurrency-related bills aimed at regulating the industry, punishing illegal financial activities, and providing services to investors. Protections have increased following a series of cryptocurrency-related scandals in the country.

By Jules

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