Singapore is introducing stringent new regulations aimed at safeguarding retail crypto investors, rolling out consumer protection measures in two phases over the next year. The Monetary Authority of Singapore (MAS) has mandated that licensed digital asset firms adhere to rules designed to bolster consumer security, starting in October 2024, with additional measures coming into effect by mid-2025.
Phase One: Immediate Safeguards for Retail Investors
From October 4, 2024, crypto firms licensed in Singapore will be required to implement crucial risk management controls, ring-fencing customer assets, and enhancing transparency through improved disclosures. These changes aim to protect investors from potential insolvencies or fraud, ensuring their assets remain secure. “The earlier safeguarding requirements that kick in in October are meant to protect customer assets in the event of fraud or insolvency,” explained Angela Ang, senior policy adviser at blockchain intelligence firm TRM Labs.
This regulatory framework, under the Payment Services Act, which first came into force in January 2020, was initially focused on combating money laundering and terrorism financing. However, as the digital asset industry has evolved, there is a growing need to enhance consumer protection, particularly in the highly volatile crypto market. “The updated guidelines ensure that consumers are duly protected and that there is a need for crypto and DPT businesses to level up consumer safeguards and controls,” said Stephanie Magnus, financial services principal at law firm Baker McKenzie Wong & Leow.
Phase Two: Stricter Rules on Investor Awareness
The second phase of the new measures, set to take effect on June 19, 2025, will require licensed digital payment token (DPT) service providers to assess retail investors’ risk awareness before offering services. Firms will no longer be allowed to incentivize customers to sign up, nor will they be able to offer leveraged or credit-based products tied to cryptocurrencies. “The hope here is to deter casual punters and make sure those that do invest, go in with their eyes open,” noted Ang.
This shift comes in the wake of high-profile collapses in the crypto sector, such as the 2022 bankruptcy of FTX and the collapse of the Terra/Luna tokens. These incidents underscored the need for stronger regulatory oversight. “The measures address many of the key vulnerabilities that concerned regulators after the downfall of major crypto exchanges,” said Ang.
Additionally, before June 19, 2025, crypto firms must conduct a risk awareness assessment for all existing retail customers. They will be allowed to skip this step only under specific circumstances, such as reducing the amount of cryptocurrencies held in a customer’s account by the June deadline.
The Global Regulatory Shift
These new rules align with a broader global trend towards tighter crypto regulations. According to Ang, “TRM’s analysis of 21 key jurisdictions in 2023 found that over half of them had tightened crypto consumer protection rules.” Singapore’s updated regulations are seen as part of this international shift, as regulators aim to minimize the risk to retail investors.
Independent Reserve Singapore CEO, Lasanka Perera, noted that while these changes were largely anticipated, they will significantly impact how retail consumers interact with digital payment tokens. “The most notable area of impact would be how retail customers are given access to DPT services moving forward,” he said.
Although the new rules may raise the barriers to entry for casual investors, industry players believe that these protections are essential. “Current regulations encourage a more informed customer base, which is vital in dealing with high-risk assets like DPTs,” Perera added.
A More Secure Future for Retail Investors
MAS’s measures follow a series of consultations and amendments that began in July 2023, aimed at enhancing customer asset segregation and custody requirements. The final proposed rules for DPT service providers were published in November 2023, setting the stage for a more secure and regulated environment for crypto investors in Singapore.
While the new rules may make it more challenging for retail investors to access digital assets, they are designed to protect consumers from the inherent risks of the volatile crypto market. As the global regulatory landscape continues to evolve, Singapore is positioning itself as a leader in crypto consumer protection, ensuring that retail investors engage with these high-risk assets more responsibly and with greater awareness.
