How similar to other jurisdictions are Singapore measures on crypto customer protection, asset segregation and custody?
Ms Ong Chengyi, head of policy for the Asia-Pacific region at blockchain analysis firm Chainalysis, said consumer protection frameworks across emerging markets have common elements.
They include assessing customer suitability, safeguarding customer assets, conducting token due diligence and managing conflicts of interest. These are on top of universal consumer protection measures such as risk disclosures and complaints handling.
A typical requirement is the segregation of customer assets from those of the service provider, both to prevent misuse and to shield customers if the service provider becomes insolvent.
“This typically involves requiring that customers’ digital assets be held on separate ledger addresses… This is a feature in Singapore, Hong Kong, Japan, Dubai and the European Union,” said Ms Ong.
Another example is for trading platform operators to assess the suitability of tokens prior to admission for trading and on an ongoing basis.
Hong Kong and Dubai have established criteria that should be considered as part of this due diligence process, Ms Ong said, adding that Singapore is looking into such obligations.
What are the key differences in consumer protection safeguards across markets?
There are evident differences in economies around the world.
In Asia, for instance, it is common to see stipulated minimum thresholds for the proportion of customer assets to be held in cold wallets. Cold wallets are disconnected from the Internet and so less susceptible to cybertheft.
This threshold is set at 98 per cent of customer assets in Hong Kong, 95 per cent in Japan and 90 per cent in Singapore. This threshold is not legislated in Dubai or in the EU.
In another example, segregation of customer assets is a basic requirement. However, virtual assets service providers in Dubai providing custody services need to segregate the digital assets of each client in separate wallets.
The MAS permits an omnibus approach given the potential costs of individual segregation that may be passed on to consumers, while Hong Kong requires that all private keys be held onshore to facilitate oversight and asset recovery – a measure not imposed here or in Dubai.
