By George Ward
According to multiple local media reports, the Singaporean Monetary Authority (MAS) has proposed new legislation. This legislation would prevent the addition of cryptocurrency to credit cards.
Meanwhile, adding cryptocurrency to credit cards would have benefited the cryptocurrency community. It would provide users access to crypto credit facilities for payments and other purposes.
A credit card is the fastest way to access money globally. Moreover, the world is moving towards a cashless economy where credit and debit cards are used.
Unfortunately, Singapore’s regulator has taken steps to prevent users from receiving credit facilities in crypto. The agency cited the recent crash of 3AC as one primary reason for its action.
Recall that the cryptocurrency hedge fund went bankrupt recently. Several crypto investors lost their assets as a result of the bankruptcy.
Earlier this week, Singapore’s central bank dropped two consultation papers. These papers seek to regulate the crypto sector better in light of recent events.
The papers state how stablecoin issuers and Digital Payment Token Service Providers (DPTSPs) should function under the country’s “Payment Services Act.”
According to the bank, these papers would reduce consumers’ risk in the crypto sector. It would also improve stablecoin transactions in the country.
In the first paper, the bank issues guidelines for how crypto-based services should operate. The bank argued that credit facilities in crypto trading could cause significant losses to users.
Hence, the agency plans to stop DPTSPs from providing credit facilities to users in fiat and crypto. Additionally, cryptocurrency service providers should no longer accept credit card deposits from users.
Regulation For Stablecoin Issuers
Furthermore, the MAS wants DPTSPs to ensure their assets are kept separate from that of its users. This is to prevent the situation with customers’ assets in 3AC.
However, if the crypto service providers cannot separate these assets, they can conduct tests to ascertain their users’ knowledge of cryptocurrency investments.
Interestingly, the second paper dwelt on issuers of stablecoins in Singapore. The document outlined specific requirements they must abide by to operate in Singapore.
The MAS also proposed that stablecoin issuers should not lend or stake stablecoins pegged to one currency. In addition, it suggests that stablecoin issuers should be banned from lending other digital assets.
Furthermore, the MAS wants stablecoin issuers to have a capital base of at least $1 million. Alternatively, they can have a capital base of 50% of their yearly operating expenses.
According to the regulator, issuers must always have these capital and other liquid assets. Meanwhile, the MAS is open to public comments on the matter until December 21st, 2022.