In its response to the feedback received on the Consultation Paper on Proposed Regulatory Measures for Digital Payment Token Services (see our article on the consultation paper), the Monetary Authority of Singapore (MAS) has confirmed that it will prohibit digital payment token (DPT) service providers (DPTSPs) from entering into lending or staking arrangements with their retail customers.
The restriction is intended to protect consumers from significant harm, particularly because they may not be properly informed about the risks of such activities and would likely not have the financial resources to withstand substantial losses. In addition, MAS noted that such arrangements would subject DPTSPs to inherent conflicts of interest. Taking a prudent approach, MAS noted that providing risk disclosures and obtaining customer consent may not be sufficient to protect consumers from the potential considerable harm that may be caused to them by lending and staking arrangements.
That said, MAS does not propose to restrict consumers from lending or staking their DPTs outside the platform of a MAS-regulated DPTSP (for example, through an unregulated lending or staking-as-a-service platform). MAS will also not prohibit DPTSPs from entering into lending or staking arrangements with non-retail customers. However, in such case, DPTSPs must provide appropriate risk disclosures and obtain explicit customer consent before lending or staking their non-retail customers’ DPTs.
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Disclaimer: This article is for general information only and does not constitute legal advice.