In a move aimed at bolstering customer protection, the Monetary Authority of Singapore (MAS) is set to require cryptocurrency companies to safeguard clients’ assets in a designated trust by the close of 2023. The decision follows the well-publicized collapse of FTX a few months ago, which resulted in substantial losses for investors. Allegations of fund misappropriation and customer deception have been leveled against the exchange.
According to Bloomberg’s report, the Singaporean regulatory body plans to enforce this obligation as a means to ensure maximum security for customers. In addition to the trust storage requirement, crypto organizations may face potential restrictions on offering lending and staking services to retail investors. Notably, Thailand’s Securities and Exchange Commission (SEC) has implemented a similar measure.
The MAS began contemplating these regulatory rules back in October 2022, a month prior to the FTX debacle that sent shockwaves through the entire industry. Despite the recent challenges, Singapore has rapidly emerged as a thriving cryptocurrency hub, attracting numerous firms due to its favorable regulatory framework. Just last month, the cryptocurrency exchange Gemini announced plans to expand its workforce in the city-state, intending to hire over 100 new employees.
Commenting on Singapore’s approach to the sector, Stuart Alderoty, Chief Legal Officer at Ripple, lauded the country’s establishment of a “workable framework that truly unites consumer protection, market integrity, and innovation.” His remarks came shortly after Ripple secured an in-principle payments license from the MAS. It is worth noting that Ripple has been embroiled in a protracted legal dispute with the Securities and Exchange Commission (SEC) in the United States.
Crypto Adoption in Singapore Soars
Providing additional security to Singaporean crypto participants sounds reasonable, considering the rising number of locals that have recently joined the ecosystem.
According to a recent survey conducted by Independent Reserve, a prominent cryptocurrency exchange, a staggering 43% of Singapore’s residents currently hold some form of digital assets. This level of adoption has not been witnessed since the bullish market of 2021, indicating a significant surge in interest and participation.
The survey further revealed that 54% of these crypto holders have embraced digital assets as a means of diversifying their investment portfolios. This strategy allows individuals to spread their risk across different asset classes, minimizing potential losses in the event of market volatility.
Interestingly, the study found that half of the investors who entered the crypto market in the past year did so based on recommendations from their family members, friends, or under the influence of social media. This highlights the growing impact of personal networks and online platforms in shaping investment decisions in the digital realm.
Among the various cryptocurrencies available, Bitcoin remains the most popular digital asset in Singapore. An overwhelming 87% of respondents indicated awareness of Bitcoin and its significance in the crypto market. Ethereum secured the second position, with 51% of participants recognizing its prominence and value.