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Singapore MAS proposes to ban cryptocurrency credits

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The Monetary Authority of Singapore (MAS) has introduced proposals to better regulate the cryptocurrency industry following the bankruptcy of Singapore’s cryptocurrency hedge fund. Three Arrows Capital (3 AC).

The Central Bank of Singapore has issued two consultation papers on proposals to regulate the operations of Digital Payment Token Service Providers (DPTSPs). stablecoin Issuer under the Payment Services Act.

Published Both consultation papers, dated October 26, aim to reduce the risks to consumers from trading cryptocurrencies and improve standards for stablecoin-related transactions.

first document include Digital Payment Token (DPT) services or proposals for services related to major cryptocurrencies such as Bitcoin (Bitcoin),ether(ethereum) or XRP (XRP).

According to the authorities, “any form of credit or leverage in the DPT’s trading” could result in “loss magnification” and lead to losses greater than the client’s investment.

In Section 3.20, MAS proposed prohibiting DPTSPs from offering “any line of credit” to retail customers, whether in the form of fiat or virtual currency. According to regulators, crypto service providers should also not be allowed to accept deposits made using credit cards in exchange for crypto services.

“MAS is proposing to ensure that the DPTSP segregates client assets from DPTSP’s own assets and holds them for the benefit of clients,” the central bank said. Some recent company failures in the crypto industry, including the bankruptcy of 3AC in June.

Beyond that, MAS also suggested that DPTSP should consider adopting consumer tests to assess retail customers’ knowledge of crypto-related risks.

Second consultation form Offers A proposed regulatory approach for stablecoins in Singapore, providing a set of business and operational requirements for stablecoin issuers.

In section 4.21 of the document, the MAS proposed that stablecoin issuers restrict lending and staking of single currency pegged stablecoins (SCS) and lending and trading of other cryptocurrencies.

“This is in lieu of a comprehensive risk-based capital regime to avoid and mitigate risks to SCS issuers. ,” the consultation document said.

The regulator also proposed to introduce a minimum base capital of $1 million or 50% of the SCS issuer’s annual operating expenses. Capital should always be held and liquid assets should be included, MAS added.

Related: Hong Kong and Singapore Ultra-HNWIs Eyeing Crypto Investments: KPMG

The regulator has asked interested parties to submit comments on the proposal by December 21, 2022.

As previously reported, the crypto winter of 2022 has been particularly detrimental to crypto lenders, as the sharp decline in the market has left many companies unable to pay their debts. Some Bitcoin analysts Crypto Lending Can Still Survive Even in this bear market, issues related to short-term assets and short-term liabilities need to be resolved.