8 November 2022

Monetary Authority of Singapore’s Consultation Paper on Proposed Regulatory Measures for Digital Payment Token Services

On 26 October 2022, the Monetary Authority of Singapore (“MAS”) published a consultation paper on its proposed regulatory measures for digital payment token (“DPT”) services. The proposed regulatory measures seek to address DPT-related trading risks posed to consumers in Singapore. The public consultation will close on 21 December 2022. To access the consultation paper, please click here.

Consumer Access

MAS proposes certain consumer access measures to apply to retail customers (i.e. customers who do not qualify as an “accredited investor” (“AI”) or “institutional investor” under the Securities and Futures Act 2001). The proposed consumer access measures include imposing:

  1. a requirement to conduct risk awareness assessments on retail customers;
  2. restrictions on offering incentives to entice retail customers to engage in DPT services; and
  3. restrictions on entering debt-financed and leveraged DPT transactions for retail customers.

Business Conduct

Segregation of Customers’ Assets and Risk Management Controls: MAS proposes that DPT Service Providers (“DPTSPs”) should:

(a) ensure that customers’ assets are segregated from its own assets and held for the benefit of the customer; and

(b) properly inform customers of the arrangements and risks involved in having their assets held by DPTSPs.

MAS also seeks comments on whether DPTSPs should be required to appoint an independent custodian to hold customers’ assets and on control measures that would help to minimise the risk of loss or misuse of customers’ DPTs.

Identification and Mitigation of Conflicts of Interest: Where a DPTSP conducts multiple activities (e.g. operating a trading platform, providing broker-dealer services and trading for their own related accounts), conflicts of interest may arise. MAS proposes that DPTSPs should:

  1. establish and implement effective policies and procedures to identify and address conflicts of interest;
  2. disclose to customers the general nature and sources of conflicts of interest and steps taken to mitigate them; and
  3. disclose the manner in which they handle and execute customer orders (e.g. whether they trade as a 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).

Disclosure of DPT Listing and Governance Policies: MAS proposes that DPT trading platform operators publish their policies and procedures on the process for selecting, listing, and reviewing DPTs, as well as the relevant governance policies.

Complaints Handling: MAS proposes that DPTSPs have in place adequate policies and procedures to handle customer complaints.


MAS is proposing to mandate the requirements in the Notice of Technology Risk Management that are currently applicable to other types of financial institutions (e.g. banks) to DPTSPs.

Market Integrity

MAS seeks comments on effective systems, procedures, and arrangements that DPT trading platform operators should implement in order to promote fair, orderly, and transparent trading of DPTs offered for sale on their trading platform. Further, MAS seeks comments on effective measures to detect and deter unfair trading practices.

IMPORTANT NOTICE: This memorandum is only intended as a guide and does not purport to be an exhaustive or conclusive discussion of the matters set out herein and should not be relied on as a substitute for definitive legal advice. Reference should always be made to the applicable statutes, the relevant subsidiary legislations and other applicable guidelines. This memorandum is not to be transmitted to any other person nor is it to be relied upon by any other person or for any other purpose or quoted or referred to in any public document or filed with any governmental or other authorities without our consent in writing. This memorandum is limited to the laws of Singapore. In issuing this memorandum, we do not assume any obligation to notify or inform you of any developments subsequent to its date that might render its contents untrue or inaccurate in whole or in part at such later time. If you would like to discuss the implications of these legal developments on your business or obtain advice, please do not hesitate to approach your usual contact at Insights Law LLC or you may direct the inquiry to our key contacts stated above.