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The MAS has made clear its ambition for Singapore to develop as a ‘Crypto Hub’, creating an environment for the digital asset ecosystem to flourish and setting out its regulatory approach. And now that it has started to grant licenses it’s important for firms to understand what is expected of them.
To the frustration of many Digital Payment Token (DPT) businesses, statistics published last July showed that obtaining a DPT licence was not straightforward, with 19% of the applications being withdrawn or rejected and no DPT licence approved since January 2020.
As of 27 April 2022, the MAS has granted licences to 4 and in-principle approvals to 7 digital payment tokens service providers. Licensees range from local nameslike DBS Vickers, crypto exchanges like Coinhako and global stablecoin players like Paxos.
The MAS has clarified its approach, explaining that if a firm offers crypto tokens as a security with an expectation of a return, it will be regulated under the Securities and Futures Act.
When digital tokens are offered as a payment instrument, however, they will be regulated under the Payment Services Act. Generally, payment service providers have a lighter regulatory regime than banks, which gives the flexibility to innovate while managing the specific risks areas more applicable to them, like anti-money laundering and technology risk management, customer protection, and Financial Stability. For example, where the supervisory approach focuses on specific areas like anti-money laundering, the MAS will hold these licensee holders to the same high standards as they hold banks.
Increasing your chance of getting a crypto service license
The MAS has indicated that entities with strong governance structures, fit and proper board/management and a strong track record would have a strong chance of being given the green light.
The MAS also sets out five areas of expectations for crypto service licensees:
- To have a formalised approach to identify and assess money laundering and terrorist financing risks before they offer new products and technologies
- To be able to take a risked based approach toward customer due diligence for all digital payment transactions
- Continually monitoring business relations with customers and ensuring that transactions are consistent with customer risk profiles similar to what banks do
- To comply with the value transfer rules and be able to transmit the necessary originator and beneficiary information to the beneficiary service provider immediately and securely
- Expected to comply with MAS Guidelines on risk management and cyber hygiene requirements
We can help
Our local team in Singapore can help review your governance and support your application to give you the biggest chance of success. We have specialists in crypto assets across Asia, UK and US who monitor the regulatory horizon, helping our clients act swiftly and effectively to maintain the highest levels of regulatory compliance. We can also call on our experts in financial crime and payments services to support where you need.
Further reading:
“Money at a Crossroads: Public or Private Digital Money?” – Summary of Panel Remarks by Mr Ravi Menon, Managing Director, Monetary Authority of Singapore, at IMF Seminar on Money at a Crossroads on 18 April 2022
“MAS’ Approach to the Crypto Ecosystem” – Summary of Keynote Interview by Mr Ravi Menon, Managing Director, Monetary Authority of Singapore, at the Financial Times’ Crypto & Digital Assets Summit on 27 April 2022
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