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The MAS has capped the value of digital payment tokens that can comprise an individual’s net personal assets when determining accredited investor eligibility. The changes came into effect on 4th October 2024. Affected firms will need to reassess their existing accredited investors by July 2025.
To effect these changes, the MAS has updated its FAQs on the Definition of Accredited Investor and Opt-in Process.
How are DPT values computed when determining AI eligibility?
In November 2023, the MAS released a response to the consultation on Proposed Regulatory Measures for Digital Payment Token (DPT) Services (Part 2). In this response, it stated that when determining accredited investor (AI) eligibility, there will be a minimum 50% haircut on the value of any DPTs. Further, the MAS wanted to apply an overall cap on the value of DPTs to avoid an overreliance on them when considering an individual’s net worth. This was also to mitigate the possible situation of customers vacillating between being AI-eligible and not, given the highly volatile nature of DPTs.
Accordingly, when determining AI eligibility, FIs are now required to comply with the following methodology from 4 October 2024:
- A haircut of at least 50% must be applied to the market value of the individual’s holdings of DPTs
- The value of the individual’s holdings of DPTs must be taken to be the lower of the following:
(a) The value calculated under point 1. above; and
(b) S$200,000.
Please note that:
- you may apply a higher haircut or adopt your own valuation models which achieve the same or more prudent outcome, and / or choose to apply a lower cap than S$200,000
- you should disclose the methodology (for instance, the relevant haircuts and caps mentioned above) used to determine the value of DPT holdings and apply it fairly to all its customers
- the above treatment of DPTs will not apply to MAS-regulated stablecoins when assessing a customer’s AI eligibility.
How long do I have to re-assess my existing AI?
Customers who were categorised as AIs before 4 October 2024 are required to be re-assessed using the above DPT valuation methodology, if their DPT holdings were previously included in their net personal assets.
You can use your existing records to assess whether your customers still meet the AI definition after applying the DPT valuation methodology. Where you determine that a customer no longer meets the AI definition, you shouldn’t enter any new transactions with the customer on the basis that the client is an AI.
The re-assessments are expected to be completed by 4 July 2025.
How can Bovill Newgate ensure your records meet the proposed AI eligibility standards?
Now is the time to review your processes and begin planning your re-assessments ahead of the MAS’ deadline. Our team of experts can help you navigate these changes and ensure that your business processes are fit for purpose, addressing any resource gaps.
Please get in touch if you’d like to walk through any of the updated requirements or how we can support you with implementing these changes to your compliance framework.
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