The Monetary Authority of Singapore (MAS) has issued the Guidelines on Consumer Protection Measures by Digital Payment Token Service Providers (Guidelines) setting out the consumer protection measures that digital payment token (DPT) service providers (DPTSPs) must implement.
The Guidelines, which take effect on 4 October 2024, should be read together with the Payment Services Act 2019 and its regulations (see our article on MAS's proposed amendments to the Payment Services Regulations).
The Guidelines set out the definition of “accredited investor” for purposes of implementing consumer protection measures for DPT service customers (see our related articles on MAS’s consultation paper and response to feedback on those measures), which is consistent with how the term is defined under the Securities and Futures Act 2001. In determining AI status, DPTSPs should disclose and regularly review its methodology for valuing customers’ assets. In addition, DPT values will be considered but subject to a minimum haircut of 50% or S$200,000, whichever is lower.
Under the Guidelines, all DPT service customers will be treated as retail customers by default. However, a customer who meets the definition of “accredited investor” may consent to a DPTSP treating them as an accredited investor (AI) after the DPTSP gives the customer the prescribed written notification, including a general warning and a clear explanation about the effect of being classified as an AI. Customers can withdraw that consent at anytime and may also choose to be treated as an AI by one DPTSP and as a retail customer by another DPTSP.
The table below sets out the key requirements imposed by the Guidelines on DPTSPs when safekeeping customers’ digital assets in-house or through a third-party custodian.
The regulatory approach to DPT-related services continuously evolves because the technology behind them and risks associated with them evolve as well. DPTSPs should take advantage of the 6-month transition period to develop and implement measures to comply with the Guidelines in a way that corresponds to their risk profile and the complexity of their offered services and supporting technologies.
OrionW regularly advises clients on the PS Act and fintech matters. For more information about the PS Act and fintech regulatory compliance, or if you have questions about this article, please contact us at fintech@orionw.com.
Disclaimer: This article is for general information only and does not constitute legal advice.
