This week, it was widely reported that Singapore will soon require cryptocurrency exchanges to keep customer assets in a trust as part of efforts to ensure funds are safeguarded following the implosion of FTX in November. The city-state also plans to push ahead with a proposal to ban lending and staking for retail investors.
Crypto industry professionals have some observations on this development.
Michael Silberberg, Head of Investor Relations at AltTab Capital, commented,
“While the intention behind separating customers from business assets is in the right place, there must be a carefully thought-out definition of what is and is not a trust. Over the last cycle, we’ve seen the dissolution of both custodians and exchanges. There will be a certification process for “qualified custodians” in the regulation with definitions of cryptographic key management and operational structures. We see a trend worldwide of “regulated custodians,” many of which are small companies with an institutional ledger and a metamask in domiciles where regulation just means “filed as a company. More counterparties does not necessarily mean more security.”
Bradley Duke, co-CEO at ETC Group, commented,
“The approach to crypto regulation taken by the Monetary Authority of Singapore (MAS) has no doubt been shaped by the high-profile failure of local hedge fund Three Arrows Capital. At ETC Group, we welcome sensible regulation in crypto that lays down a clear framework bringing stability and comfort to both service providers and investors alike. The new regulation goes far including a ban on lending and staking for retail investors – but the MAS has stated that they could review that position in future. The regulator in Hong Kong, its regional rival in financial services, will surely be examining this new regulation closely.”