Crypto winter setbacks prompt new rules
Investor protection in the crypto space has been a long drawn discussion triggered by the setbacks in the crypto winter last year. The collapse of firms like Terraform Labs, BlockFi, Celsius, and FTX have been linked to crypto lending and staking.
Regulators in Singapore and Thailand are moving to ban lending and staking to protect investors from losing funds.
Singapore announces new crypto rules
The Monetary Authority of Singapore (MAS) has directed that crypto exchanges operating in the country move customer assets in trust. This guidelines are to be followed and assets are to be moved before the end of the year.
The guidelines also stated that Singapore is moving forward with a motion to ban lending and staking programmes for retail investors. In October 2022, MAS reached a conclusion that it needed to tighten its regulatory framework for crypto assets and linked operations.
The regulator acknowledged that it’s impossible for the regulations to fully protect investors from losses because of the high risk nature of the market. But it noted that investors are required to do their due diligence, especially while trading.
The financial watchdog stated that in order to protect users’ funds, the digital payment token (DPT) service providers got widespread support. The firms are required under the new regulations to keep up-to-date records and examine the daily settlement of their customers’ assets. The registered cryptocurrency exchanges must, however, make sure that the custody functions independently of the other business divisions.
Read more: The SEC speed bumps recent Bitcoin spot ETF applications, says they are not clear or comprehensive
Thailand moves in similar direction
In a similar move, Thailand’s Securities and Exchange Commission (SEC) has also issued new rules for digital asset service providers.
The new rules require that crypto exchanges and other operators in the sector issue adequate warnings of the high risk nature of crypto trading. All platforms must now display a message which reads:
“Cryptocurrencies are high risk. Please study and understand the risks of cryptocurrencies thoroughly, because you may lose the entire investment amount.”
The warning message is required to be clearly visible, and before customers can use the service. Users must acknowledge the risk and consent.
The new guidelines further prohibits exchanges from using customers’ funds for lending or investment. Thus, banning crypto lending services in the country.
These new rules follow a September 1, 2022 directive where the regulator approved the need for security warnings by cryptocurrency business operators to disclose the risks of trading cryptocurrencies.
The new protection rules follow the 2022 crisis that led to massive losses in the bear market. Several crypto lending platforms that had promised huge returns, crashed in the crypto winter, prompting the need for tighter regulations of the crypto space.
Disclaimer: CryptoPlug does not recommend that any cryptocurrency should be bought, sold, or held by you. Do conduct your own due diligence and consult your financial advisor before making any investment decisions.
