To bolster the integrity of the cryptocurrency market and safeguard investors, Singapore’s apex bank is bringing forth new stipulations.

Singapore’s leading financial regulator, the Monetary Authority of Singapore (MAS), declared on July 3rd that it’s bringing in fresh rules that mandate cryptocurrency service providers to secure their clients’ assets in a legally backed trust by the close of the year.

These measures are designed to guard against the misuse or loss of clients’ assets, and aid in the recovery of these assets in case the provider of digital payment token (DPT) services declares bankruptcy, the regulator explained.

The latest asset-holding rules have been drawn up in the wake of a public discourse held in October 2022 regarding regulatory steps to mitigate the risk factors for consumers in the sphere of cryptocurrency trading. As per the MAS, a diverse set of respondents exhibited significant interest in the consultation.

The MAS noted in its official response to the public discourse that most respondents concurred with the proposal for digital payment token service providers (DPTSPs) to be permitted to hold client assets in the same trust account as the assets of its other clients.

Conversely, a minority of respondents disagreed, proposing that DPTSPs should be compelled to differentiate each customer’s assets from other customers’ assets via separate blockchain addresses, the MAS stated. The proponents of this view argued that individual custody segregation could yield more transparency for customers by enabling them to verify and pinpoint their own holdings.

Besides the custody directives, the MAS has also enforced daily reconciliation of customer assets, and maintenance of accurate books and records, by crypto companies. DPTSPs are also required to retain access to, and operational control of, customers’ DPTs in Singapore, and ascertain that the custody function is functionally autonomous from other business units.

Moreover, the regulator is contemplating a prohibition on crypto service providers from endorsing the staking or lending of their retail customers’ DPTs. For institutional and accredited investors, DPT providers are permitted to carry on such activities.

Some respondents also recommended the possibility of allowing crypto firms to offer staking and lending services contingent upon retail customers’ informed consent and comprehensive risk disclosures. “Other respondents, however, championed an outright ban on these speculative, high-risk activities,” the MAS added, while also mentioning that it will continue to monitor market shifts and consumer risk awareness, ensuring that their protective measures remain balanced and apt.

The latest regulatory actions related to investor protection in Singapore are geared to prevent industry collapses similar to the FTX debacle, which led to customers losing millions. The crypto lending crisis of 2022 also left a significant impact on Singapore-based firms, with prominent players such as Three Arrows Capital and Hodlnaut filing for bankruptcy during the bearish market.