Singapore orders digital currency firms to keep customer funds ‘under statutory trust’
The Monetary Authority of Singapore (MAS) has rolled out draft regulations to govern the activities of industry service providers to protect investors. A central theme for the new rules is the requirement for digital currency firms to hold customers assets in a statutory trust for safekeeping. According to the central bank, the provision of a statutory trust will help customers recover their assets in the event of a black swan event like insolvency. Other provisions in the draft regulations will see virtual asset service providers carry out daily reconciliation of assets while keeping proper record books. Firms operating in Singapore are also expected to “segregate customers assets from its own assets and held in trust” and provide information to clients on any risks stemming from storing their assets with the service providers. The draft regulation indicates that Singapores central bank is keen on improving standards among digital asset custody service providers. Despite the robust nature of custody guidelines, MAS warns consumers to conduct due diligence before investing in digital assets “given the extremely high risk and speculative nature.” “While the segregation and custody requirements will minimize the risk of loss of customers assets, consumers may still face significant delays in recovering their assets in