The Monetary Authority of Singapore announced that crypto service providers would be required to place customer assets in a statutory fund before the end of this year.

Public consultation on enhancing customer protection was initiated by the MAS in October 2022.

The MAS stated that “this will reduce the risk of misuse or loss of assets of customers, and facilitate recovery of assets of customers in the event of an insolvency of a DPT service provider (Digital Payment Tokens or Cryptocurrency).

The MAS also prohibited cryptocurrency service providers to facilitate lending and staking to retail customers. However, institutional and accredited investors can continue to use these services.

Singapore’s central Bank has also requested public feedback regarding legislative amendments focusing on the implementation latest requirements.

Angela Ang is a former MAS regulator and Senior Policy Advisor at TRM Labs, a blockchain intelligence company. She said that this latest restriction on retail access to cryptocurrency should not be a surprise for anyone who follows the Singapore market. “MAS’s decision to delay certain proposals such as requiring a third-party to be the custodian of customer assets shows that it is listening to industry concerns and is sensitive to practical issues such as a lack of third-party custody providers.”

Ang told CoinDesk by email that Singapore’s rules are similar to those of other payment service providers, but are less strict than Hong Kong’s. Singapore requires that 90% of crypto held by customers be in crypto wallets. Hong Kong only required 98%. Cold wallets do not have to be located onshore as they are in Hong Kong.

The MAS has indicated that it may change its position in the future on preventing crypto entities from facilitating retail customers’ lending and staking tokens.

The MAS stated that “some respondents suggested allowing DPT service providers offer these activities, with retail customer consent and disclosure of risk, while others advocated a prohibition on these high-risk activities and speculative ones.” “MAS will continue to monitor the market and ensure consumer awareness of risk as they evolve. We will also take measures to ensure our measures are balanced and appropriate.”

Singapore’s stated goal of ” being brutal and unrelentingly tough on bad behavior in the crypto industry” goes hand-in-hand with its commitment to support technologies in the industry in order to improve the existing traditional financial system. The MAS proposed last month ways to create open, interoperable digital asset networks and standards for digital money.

Read More: Singapore, the Center of Asian Crypto Wealth is Ready for a New Reset

UPDATE: July 3, 2023 at 09:00 UTC: Includes context and details throughout, as well as a comment by Angela Ang.

UPDATE (3 July 2023, 9:27 UTC). Adds a second paraphrased comment by Angela Ang.

Parikshit Miishra is the editor.