- The Monetary Authority of Singapore (MAS) introduces new regulations to ensure the safekeeping of customer funds and prevent incidents like the FTX case.
- MAS plans to restrict lending and staking services in the near future, limiting participation to accredited and institutional investors, which may impact private investors.
The Monetary Authority of Singapore (MAS) has announced new measures requiring crypto service providers to store customer funds differently. The aim is to prevent situations similar to the FTX case, where the management mixed customer deposits with the assets of the exchange and investment firm Alameda Research. This resulted in a shortfall of approximately $8 billion, with ongoing legal proceedings and bankruptcy proceedings still underway.
To ensure strict and transparent separation, MAS demands that all customer deposits be held in a trust by the end of the year. Furthermore, service providers must also segregate crypto custody operations separately.
Simultaneously, MAS emphasized its intention to restrict lending and staking as a service in the future. According to the authority, only accredited and institutional investors will be eligible, while private investors will only be able to participate in staking independently.
Impact on Private Investors and Potential Opportunities in Hong Kong
If MAS moves forward with its plans, private investors will be excluded for their protection. However, these services are often crucial for individuals who face high barriers to entry. For example, Ethereum staking requires 32 ETH, specific knowledge, and hardware. Therefore, those without at least $60,000 at their disposal will no longer have access to these opportunities.
MAS also warns against service providers based overseas, possibly indicating a similar approach to other countries that restrict certain activities in Singapore even if the company is headquartered abroad.
As a result, Hong Kong has a promising chance to emerge as the new crypto hub in Asia. Recently, HSBC launched crypto ETF trading, and the industry eagerly anticipates the opening of the Chinese market. With regulatory tightening in Singapore, Hong Kong may gain newfound significance. Overall, MAS’s actions are commendable, as investors and companies alike can do without another scandal like the FTX case.
It remains to be seen how these measures will shape the crypto landscape in Singapore and whether the restrictions will lead to a shift of activity to other jurisdictions. Investors and industry players should closely monitor developments and adapt their strategies accordingly.
