Singapore Strengthens Regulation of Cryptocurrencies

The Payment Services (Amendment) Bill passed in January 2021, which expands the scope of payment services the Monetary Authority of Singapore (MAS) will regulate, will go live from tomorrow.

The amendment to the Payment Services Act brings three new activities under its purview: crypto custody services, facilitating the transmission or exchange of crypto, and facilitating cross-border money transfer.

The MAS said the law may cover cases even where the service provider does not come into possession of the funds or where the money is not accepted or received in Singapore.

It also imposes user protection and financial stability-related requirements on digital payment token (DPT) service providers.

These amendments will take effect in stages from 4 April 2024, MAS said in an announcement on Wednesday.

The amended Payment Services Regulations on safeguarding of assets belonging to customers of DPT service providers will take effect six months from 4 April 2024.

These include segregating customers’ assets and placing them in a trust account for the benefit of customers, maintaining proper books and records, and ensuring that effective systems and controls are in place to protect the integrity and security of customers’ assets.

Entities that do not fulfil the requirements above are required to cease the activities when the amendments come into effect. Transitional arrangements will be provided for entities affected by the expanded scope.

"These amendments are a long time coming, and bring much-needed regulatory clarity to custody providers, a lynchpin of the crypto ecosystem. Events of the past few years show that robust regulation around the custody of customers’ crypto assets is critical, and it is welcome progress to see this go live in Singapore," Angela Ang, senior policy advisor, TRM Labs said.

With these amendments coming into effect, Singapore is establishing itself as a frontrunner in setting a clear regulatory framework for the cryptocurrency industry. This not only fosters trust and security for crypto investors but also paves the way for further innovation within the local crypto ecosystem.