On 26 October 2022, the MAS consulted (in the “Consultation”) on a slew of additional obligations for digital payment token (DPT) service providers (whether licensed or exempt) under the Payment Services Act 2019 (“PS Act”). The additional obligations represent a sea change to the current regime applicable DPT service providers. They import a number of regulatory concepts found in the Securities and Futures Act that are applicable to more “bricks and mortar” capital markets intermediaries such as requirements around handling of customers’ assets, providing customer statement of accounts, daily reconciliation. Given recent high-profile scandals in the crypto world, it is clear why the MAS is proposing the new measures, which are already commonplace for firms regulated by the MAS under Acts other than the PS Act.


However, DPT service providers have traditionally been more “tech” than “fin[ance]” and are likely to be unfamiliar with operationalising the new processes being proposed. Hence, the MAS’ consultation should be carefully digested by DPT service providers.


We summarise the MAS’ various proposals in the Consultation below.


Consumer Access Measures

  1. Requiring that the awareness of Singapore-residents or Singapore-incorporated companies that are “retail customers” (i.e. not accredited or institutional investors) of the risks of DPT be tested before they may access DPT services.
  1. Capping or excluding the value of DPTs held by Singapore-residents or Singapore-incorporated companies when determining if they qualify to be an accredited investor.
  1. Banning offering of monetary or non-monetary incentives to retail customers to use any DPT service or to anyone to promote DPT services to retail customers.
  1. Banning (a) provision of any credit to a retail customer to facilitate the latter’s purchase or continued holding of DPTs (b) entry into with, or facilitation of entry by a retail customer into, a leveraged DPT transaction (c) accepting credit / charge card payments (including payments made via e-wallets topped up with credit cards) by a retail customer in connection with any DPT service.

Segregation of Customers’ Assets and Risk Management Controls

  1. DPT service providers must segregate their assets from those of customers and hold customers’ assets for the customer’s benefit e.g. in a trust account, and providing customers with written disclosures of how customers’ assets will be held. MAS is considering whether to require independent custody.
  1. Daily reconciliation of customers’ assets held by DPT service providers
  1. Provision to customers of statement of accounts, at least monthly
  1. Requiring DPT service providers to have specified safeguards for private keys to custodial wallets that hold customers’ DPTs
  1. Requiring disclosures to be given to customers on the risks of staking/lending or banning DPT service providers from lending out retail customers’ DPTs
  1. Banning mortgages, charges, pledges or hypothecation of retail customers’ DPTs and requiring DPT service providers to provide non-retail customers with a clear risk disclosure document and obtain the customer’s explicit consent to the service provider mortgaging, charging, pledging or hypothecating their DPTs

Identification and Mitigation of Conflicts of Interest

  1. Requiring DPT service providers to have effective policies and procedures to identify and address conflicts of interests and to disclose to customers any conflicts of interest and the steps taken to mitigate them
  1. Requiring DPT service providers to disclose how they handle and execute customer orders (e.g., whether they trade as counterparty against the customer or facilitate trade matching between customers), and the capacity in which they are doing so (e.g., as agent or principal)
  1. DPT service providers that execute orders to trade DPTs on behalf of their customers should not misuse any information relating to customers’ orders and should prevent the misuse of such information by employees
  1. DPT trading platform operators should not (i) buy or sell DPTs for their own account; and (ii) permit their related corporations to buy or sell DPTs for their own account on the DPT trading platform.

Disclosure of DPT Listing and Governance Policies

  1. DPT trading platform operators should clearly disclose their DPT listing and governance policies, which should address certain specified matters e.g. decision-making process for selecting and listing of DPTs, and how the evaluation criteria was applied before a DPT was made available for trading on the DPT trading platform, how unfair or disorderly trading practices of DPTs is addressed on the DPT trading platform and the settlement procedures of DPT transactions.

Complaints Handling

  1. DPT service providers must have policies and procedures to handle customer complaints
  1. Banning DPT service providers from DPTSPs hindering or preventing retail customers from bringing disputes before the courts of Singapore

Managing Technology and Cyber Risks

  1. Applying the Notice on Technology Risk Management to DPT service providers

Market Integrity

MAS also highlighted an emerging issue of market manipulation, misleading conduct and insider trading in DPTs. MAS encouraged DPT service providers to have frameworks, e.g. trading rules and surveillance systems, in place to detect and deter of market manipulation, misleading conduct and insider trading in DPTs. However, the MAS did not propose to impose such a requirement on DPT service providers at this stage.



MAS is giving slightly less than 2 months for submission of written comments by 21 December 2022. Depending on consultation responses, the MAS proposed to issue Guidelines giving DPT service providers 6-9 months from publication of the Guidelines to meet them. The MAS has said that the Guidelines are a first step to implementing the proposals being consulted on and after the Guidelines are issued the MAS will again consult on issuing subsidiary legislation regarding implementation of the proposals.


For further information and compliance advisory services regarding the Consultation Paper proposed by MAS and regulatory measures on DPT service providers, contact us at
%d bloggers like this: