Singapore and Thailand, two prominent Asian countries in the crypto space, have recently announced new directives aimed at regulating the handling of digital assets. On July 3, both nations released guidelines to ensure investor protection and increase transparency in the industry.
Singapore’s Monetary Authority (MAS) issued six new requirements for crypto businesses to safeguard the interests of crypto investors. Alongside these rules, MAS banned exchanges from offering lending or staking services to retail users, deeming them unsuitable for this investor category. However, the central bank clarified that institutional and accredited investors could still access these services. The new regulations also compel exchanges to segregate user and business assets and hold user assets in a statutory trust. By doing so, the risk of loss or misuse of customers’ assets can be mitigated, and asset recovery in the event of insolvency becomes more feasible. Exchanges registered in Singapore must comply with these rules by the end of the year. Additionally, the guidelines stipulate that crypto exchanges must separate their custody business from other units to ensure operational independence and mitigate associated risks. Providers of crypto services must guarantee the safety of user funds, maintain accurate records with daily reconciliation of user assets, and retain access and operational controls within Singapore. The MAS also emphasized the need for clear risk disclosures on exchanges.
The MAS sought public input on increasing investor protection through a consultation that began in October 2022. The new rules follow this consultation, and the MAS is currently soliciting feedback on draft amendments to the Payment Services Regulations to incorporate the requirements. Furthermore, the MAS has released a separate consultation paper aimed at imposing additional requirements on crypto businesses to prevent unfair trading practices. This document outlines legislative provisions and defines misconduct offenses, including market rigging and manipulation. In light of these developments, the MAS has reiterated its warning to the public regarding the risks associated with cryptocurrencies. While the new rules aim to minimize asset loss risks, the MAS cautions that users may still face significant delays in asset recovery in the event of bankruptcy. It emphasizes that regulations alone cannot fully protect consumers from losses due to the highly speculative nature of digital payment token (DPT) trading. Investors are urged to exercise extreme caution and avoid engaging with unregistered local and international exchanges to safeguard their crypto assets.
Meanwhile, the Thai Securities and Exchange Commission has also introduced new guidelines to enhance transparency and reduce risk in the digital asset sector. The regulatory body has established explicit criteria for risk warning disclosures by digital currency operators and imposed prohibitions on certain services. These measures aim to improve investor protection and ensure traders are well-informed about the inherent risks associated with digital currencies. The committee responsible for these regulations approved resolutions after multiple meetings in 2022 and 2023, setting requirements for risk disclosures and banning specific services.
The new regulations in Thailand prohibit digital asset businesses from accepting digital currencies and utilizing deposited assets for lending or investment purposes that promise returns to depositors. Staking services are also subject to restrictions, with businesses prohibited from offering returns on deposited digital assets unless it falls under promotional activities defined by Thai SEC rules. Furthermore, companies are not allowed to advertise or persuade the public to engage in such services.
In a related development, the South Korean National Assembly recently passed the Virtual Asset User Protection Act, which encompasses 19 crypto-related bills. This comprehensive legislation is designed to regulate the crypto industry, combat illicit financial activities, and provide investor protection following a series of crypto-related scandals in the country. This signifies further progress in the Asian market’s efforts to establish regulatory frameworks for the crypto sector.