On Wednesday, the Monetary Authority of Singapore (MAS) posted two consultation papers initiating stern regulatory efforts to reduce the risk to users from cryptocurrency trading as part of their proposal. In addition, MAS supports the expansion of stablecoins as a credible exchange. 

The Central bank of Singapore states that crypto trading is highly risky and not fit for the general crowd. They also believe that crypto serves a supporting role in a bigger digital asset ecosystem, and would not be beneficial to completely forbid them. However, MAS has pitched a series of restrictions on digital payment token service providers, including banning incentives to retail customers. 

It also appears that MAS is now seeking feedback from the public about the proposed measure due to Terra’s collapse. This proposal is the biggest set Singapore has developed since 2019. In regards to the proposed restriction of debt finance and leveraged crypto transactions, MAS is still looking forward to the comments from the public. The said restriction will prohibit the providers from doing credit card transactions.

On the other hand, MAS is also proposing to implement appropriate risk management controls for providers and segregate customers’ assets in case of bankruptcy for a certain business. 

“The enhanced regulatory regime for stablecoins aims to support the development of value-adding 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 the associated risks.” – Ho Hern Shin, deputy managing director of MAS.

Today, the debate on the appointment of an independent custodian for all providers begins and will last for about 4 weeks.