Service providers should also discourage retail customers from cryptocurrency speculation by not offering any incentives to trade in cryptocurrencies, said MAS.

A retail customer refers to a customer who is not an accredited investor or institutional investor.

“Retail customers often do not have a full picture of the associated risks and may lack the financial resources to withstand the large losses typical in cryptocurrency markets,” MAS said.

Additionally, service providers must not provide financing, margin, or leverage transactions. They must also limit the value of cryptocurrencies in determining a customer’s net worth.

Crypto service providers must also determine a customer’s risk awareness to access their services.

Service providers, except institutional investors, must treat all customers as retail customers by default.

Only accredited investors, currently defined as someone with at least S$2 million in net personal assets, are exempted from the rules. Crypto assets can form part of this S$2 million, but no more than 50 percent of a person’s crypto holdings can be used, or up to S$200,000, whichever is lower.

MAS also laid out business conduct rules for crypto service providers. They have to identify, mitigate, and disclose potential and actual conflicts of interest, as well as publish policies, procedures, and criteria that govern the listing of a DPT.

They must also establish effective policies and procedures to handle customer complaints and resolve disputes.

Regarding technology and cyber risk, MAS will require DPT service providers to maintain high availability and recoverability of their critical systems, in line with current requirements imposed on financial institutions.

“DPT service providers must safeguard the interests of consumers who interact with their platforms and use their services,” said Ms Ho Hern Shin, MAS’s deputy managing director (financial supervision).

“While these business conduct and consumer access measures can help meet this objective, they cannot insulate customers from losses associated with the inherently speculative and hazardous nature of cryptocurrency trading.

“We urge consumers to remain vigilant and exercise utmost caution when dealing in DPT services and to not deal with unregulated entities, including those based overseas.”