The Monetary Authority of Singapore (MAS) has recently taken a step to introduce more regulations to the cryptocurrency industry.
To achieve its goal, the MAS has come up with proposals in regard to the cryptocurrency industry’s regulations.
The reason behind the Proposal
The Singaporean regulatory authority has come into action following the recent incident where Three Arrows Capital (3AC) resorted to filing bankruptcy.
Three Arrows Capital was a major cryptocurrency hedge fund based in Singapore. The firm ended up filing for bankruptcy after it failed to manage its finances.
In cooperation with the MAS, the central bank of Singapore has proceeded with issuing two papers. These papers are for consultation on the proposals made for changes in cryptocurrency regulations.
The particular act they aim to regulate is the DPTSP and it would also have an impact on the Payment Services Act, which is for stablecoin issuers.
Both consultation papers were issued and published by the Bank of Singapore on October 26. The purpose of the consultation papers is to ensure that the risks involving cryptocurrencies are reduced for the consumers.
The purpose of the papers is to improve the standards of transactions as well. These standards are related to stablecoins. With the help of the new regulations, more protection and safety will be ensured for the users.
Things Mentioned in the Documents
The first document revolves around the services offered for the major crypto such as XRP, Ether, or Bitcoin. The same document provides information on the services related to the digital payment token (DPT).
In the document, the authority has explained that any kind of trading of DPTs that involved any kind of leverage or credit would result in increasing losses.
Therefore, the MAS has proceeded with demanding the banning of the DPTSPs. If the ban is imposed, it would stop the DPTSPs from providing any kind of credit facility to retail customers.
These credit facilities would include all kinds of cryptocurrencies and even fiat currencies. The proposal also stops cryptocurrency service providers from taking deposits via credit cards.
The second consultation paper targets the regulations governing stablecoins in the cryptocurrency industry. The stablecoins being referred to in the consultation paper are being circulated within Singapore.
According to the new proposal, the stablecoin issuers must meet a particular set of operational and business requirements. If they meet such criteria, only then they can provide services in Singapore.
According to the new proposal, the stablecoin issuers in Singapore are barred from issuing any stablecoins that are pegged with the Singaporean or a single currency.
They cannot even provide the same services to firms based in Singapore. These services are related to the issuance of cryptocurrencies other than stablecoins.