Singapore has taken significant steps forward in its regulation of the cryptocurrency industry, as demonstrated by its recent changes to payment services involving custody of digital assets and a broader range of firms involved in fund transfers. In the upcoming hearings in 2024, Singapore will reveal its policy of becoming a leading global destination for cryptocurrency institutions, with a strong emphasis on prioritizing security and financial stability.
The draft rules and the Payment Services Act (PS Act) have been introduced to replace the provision of digital payment token (DPT) services. These new regulations include stringent requirements aimed at protecting users and ensuring a stable economy. It can also be inferred that the PS Act applies to any business facilitating the transmission or exchange of tokens, even if they do not handle the assets themselves. Additionally, companies engaging in cross-currency transfers will be subject to the same regulations, regardless of the location of the funds involved.
The amendments made to the regulations also address measures related to anti-money laundering and counter-financing terrorism. The Monetary Authority of Singapore (MAS) has taken on the role of overseeing DPT service providers, who will now be required to comply with strict conditions designed to protect users and maintain stability in the crypto industry.
Businesses operating within the expanded scope of the PS Act will be accounted for using transitional mechanisms. They will need to submit a notice to MAS and apply for a license within 30 days of the amendment’s initiation in order to continue their operations. This must be done within six months of the regulatory review being initiated. License applications must also include audit reports in the form of an attestation, which should be filed within nine months of the amendments. These reports should focus on the entity’s trading activities and compliance with anti-money laundering and countering terrorism financing standards.
Failure to comply with the new regulations could result in penalties, including the cessation of activities starting from January 1st when the amendments come into effect. The amended rules include processes such as segregating client assets among trust accounts, maintaining reliable order books, and implementing robust systems and controls to protect client property.
In response to concerns about cyber-attacks targeting industrial control systems and potential disruptions to critical infrastructures, the government and other authorities have developed protocols to prevent such attacks.
Angela Deborah, from BBC One’s blockchain intelligence firm TRM Labs, acknowledges that some of these regulations have been in development for a significant amount of time. She believes that they bring much-needed clarity to crucial aspects of the crypto ecosystem and provide a stable regulatory framework that supports innovation.
Singapore’s evolving regulations demonstrate the city’s commitment to becoming a major player and leader in the global cryptocurrency market. The goal is to ensure user protection and financial stability while fostering innovation. These regulations create an environment that encourages the growth of digital asset businesses while maintaining strict standards that instill confidence in the market and promote clarity and accountability. Ultimately, this positions Singapore as a key player in the financial sector.
