The Monetary Authority of Singapore (MAS) has made a significant move to broaden the regulatory framework surrounding digital payment token (DPT) service providers under the country’s Payment Services Act (PS Act).
This initiative aims to incorporate a variety of activities within the regulatory perimeter, including the provision of custodial services for DPTs, the facilitation of token transfers and exchanges, and the enabling of cross-border money transfers.
The MAS emphasized that these regulations would apply even when the funds are not physically handled by the service provider or when the transactions do not directly involve money entering or leaving Singapore.
With these amendments, the MAS seeks to strengthen its oversight by introducing additional requirements for DPT service providers, particularly in areas crucial to maintaining a secure financial environment.
The authority stated, “The amendments will empower MAS to impose requirements relating to anti-money laundering and countering the financing of terrorism, user protection and financial stability on DPT service providers.”
This regulatory expansion will be phased in starting April 4, with transitional provisions set to support entities navigating the new landscape.
Affected firms are mandated to communicate with MAS within a 30-day window and must secure a license within six months from this date to maintain operational status during the review process.
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The MAS has also made it clear that entities failing to meet these stipulations will be compelled to discontinue their operations immediately upon the enactment of these changes.
Moreover, the MAS plans to introduce further amendments aimed at bolstering the safeguarding of customer assets among payment token service providers.
These additional rules will address the segregation of customer assets, their safekeeping in trust accounts, and the maintenance of detailed records to enhance the security of these assets.
Such protective measures are slated for implementation six months after April 4.
The tightening of regulatory controls has not deterred crypto companies from entering the Singapore market, with prominent players like Crypto.com, Coinbase, and Ripple successfully obtaining full payment institution licenses.
Specifically, Crypto.com secured its Major Payment Institution (MPI) license in June 2023, Ripple was granted formal approval on October 4, and Coinbase achieved full MPI licensure on October 2, 2023, underscoring Singapore’s appeal as a crypto-friendly financial hub.
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