Syedur Rahman of Rahman Ravelli details the recent licensing of cryptocurrency activity in Singapore.
As of 28th January 2020, legislation is in effect that regulates the operations of cryptocurrency firms in Singapore. The Payment Services Act (PSA) was introduced to serve as the new regulatory framework for cryptocurrency payments.
The Act regulates seven types of payment services, which are defined as follows:
- Account issuance services: services that issue a payment account or relate to operations required for running a payment account; including an e-wallet or non-bank issued credit card.
- Money transfer services: both domestic and cross-border.
- Merchant acquisition services: where a service provider accepts and processes payment transactions for a merchant.
- E-money issuance services: services that allow for e-money to be issued in Singapore so that users can pay merchants or transfer e-money to other individuals; including money stored in e-wallets.
- Digital payment token services: services for the buying, selling and exchanging of digital payment tokens, such as cryptocurrencies.
- Money‑changing services.
Any business offering any of the above services must apply for licence, unless otherwise exempt. The type of licences are set out below:
- Money-changing licence: This is required for money-changing services.
- Standard payment institution licence: This is required for a business conducting any combination of payment services with an average monthly payment transaction total of up to S$3 million for any one payment service or up to S$6 million for two or more payment services.
- Major payment institution licence: This must be obtained by a business providing one or more of the payment services listed above (except an e-money account issuance service or a money-changing service) with monthly average payment thresholds that exceed the thresholds for the standard payment institution licence. A business providing an e-money account issuance service or an e-money issuance service that exceeds the specified threshold of an average daily e-money float of up to S$5 million over a calendar year must also apply for this licence.
An applicant for a standard payment institution licence or major payment institution licence must be a company incorporated in Singapore or overseas, have a permanent place of business or registered office in Singapore and have at least one executive director who is a Singapore citizen, a permanent resident of Singapore or belong to a class of persons prescribed by the Monetary Authority of Singapore (MAS). It must also meet financial and operational requirements that the MAS may specify for the duration of the licence.
An applicant for a money-changing licence must have a permanent place of business or a registered office in Singapore. The MAS has to be satisfied about the financial condition of an applicant for any of the three licences and believe that they are a fit and proper person under MAS guidelines and that granting of a licence is in the public interest.
The MAS has stated that it expects the new regulatory framework to strengthen consumer protection and promote confidence in e-payments.
This article also featured on Lexology.com.
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