Singapore’s Monetary Authority (MAS) has launched measures to regulate cryptocurrencies after Three Arrows Capital (3AC) went into administration, it was revealed on Wednesday.
The city-state’s central bank revealed a series of proposals aimed at regulating digital payment token service providers (DPTSP) along with stablecoin issuers via the Payment Services Act.
It aims to target digital payment token (DPT) services for top cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH), and XRP in a bid to lower consumer exposure to risks and improve stablecoin-based transaction standards.
In a statement, the authority said it would target three key areas:
Consumer access, requiring DPT service providers to show relevant risk disclosures to allow retail consumers to “make informed decisions regarding cryptocurrency trading” while also banning use of credit facilities.
Business Conduct, where DPT service providers must properly segregate customer assets, mitigate potential conflicts of interest from their multiple roles, and “establish processes for complaints handling.”
Technology Risks, requiring DPT service providers to maintain “high availability and recoverability of their critical systems,” similarly to banking institutions.
Regarding stablecoins, MAS proposes in section 4.21 to restrict issuers of single-currency pegged stablecoins (SCSs) from lending and staking, as well as lending or trading additional cryptocurrencies.
SCS issuers must also hold a threshold of $1 million in base capital, or 50 percent of annual operating expenses, at all times, including liquid assets, the regulator added.
Starry Night Capital NFT Fund
The measures come after Teneo, a liquidation firm for Three Arrows Capital, acquired control of the firm’s non-fungible token (NFT) assets, moving them to a Gnosis Wallet, according to a filing from the company,
Three Arrows Capital fell into administration in July due to “extreme fluctuations” in the bearish cryptocurrency market crisis. Prior to the collapse, the firm had paid $21 million USD to build its Starry Night Capital NFT Fund amid the huge push for NFTs in 2021.
