Singapore's MAS Seeks Feedback on New Crypto Licensing Regime

The Monetary Authority of Singapore (MAS) has issued a consultation paper seeking industry feedback on proposed regulatory measures for digital token service providers (DTSPs) under the Financial Services and Markets Act (FSM Act).

The FSM Act, passed in Parliament on April 5, 2022, provides a legislative framework for regulating digital token service providers DTSPs operating within and outside Singapore. The Act aims to enhance the regulatory oversight of DTSPs to mitigate risks associated with digital tokens.

The new framework extends Singapore's crypto regulations to cover Singapore corporations and individuals or partnerships that provide crypto services outside the country, addressing a potential gap in the current regulatory regime.

DTSPs will need to obtain a license from the MAS and comply with various conduct requirements, including anti-money laundering (AML) rules and maintaining a substantial presence in Singapore. The MAS has clarified that it will only grant DTSP licenses in exceptional cases, emphasizing that most operators with Singapore touchpoints will likely be covered under the existing crypto regulatory framework.

The consultation paper proposes several regulatory instruments under the FSM Act, including FSM regulations, AML/CFT requirements, technology risk management and cyber hygiene notices, and conduct and disclosure requirements.

The MAS is actively encouraging industry participation in shaping the final regulations. Stakeholders are invited to provide their input on various aspects of the proposed framework, including third-party reliance, correspondent account services, and value transfer requirements.

Following the consultation period, the MAS plans to publish the final regulations and guidelines at least four weeks before they come into force.

Comments from participants in the financial industry and other interested parties are welcome until 4 November 2024 at this link.