Financial Crime World

Singapore Introduces New Regulations for Digital Payment Token Service Providers

In a move aimed at enhancing financial stability and consumer protection, the Monetary Authority of Singapore (MAS) has introduced new regulations for digital payment token service providers operating in the country.

Enhanced Financial Stability and Consumer Protection

The new rules aim to promote a stable and secure financial system while encouraging innovation and growth in the digital payment token industry. To achieve this, all entities providing digital payment token services must obtain a license from the MAS or be exempted.

Exemption Period Extended

The exemption period, which was initially set to end on January 28, 2020, has been extended until July 28, 2020 for those who were already providing such services before that date. This allows existing service providers to continue operating while they prepare to meet the new licensing requirements.

Types of Licenses Available

There are three types of licenses available for digital payment token service providers:

  • Money-changing license: Suitable for businesses that only provide money-changing services.
  • Standard Payment Institution (SPI) license: Allows holders to provide payment services, including operations with cryptocurrency, subject to certain thresholds.
  • Major Payment Institution (MPI) license: Offers the same opportunities as the SPI license but is designed for larger companies.

Licensing Requirements

To obtain a license, applicants must meet specific criteria, including:

  • Being a Singapore-incorporated company or a Singapore branch of a foreign corporation
  • Having a permanent place of business or registered office in Singapore
  • Having a minimum base capital of:
    • S$100,000 (approximately $73,740) for SPIs
    • S$250,000 (approximately $184,300) for MPIs
  • Implementing a risk management system specialized for cryptocurrency activities

Assessment Criteria

The MAS will assess applications based on factors such as:

  • Fitness and propriety
  • Competency of key individuals
  • Security
  • Compliance arrangements
  • Technology risk management
  • Audit arrangements
  • Annual audit requirements
  • Letter of responsibility
  • Letter of undertaking

Exempted Service Providers

DPT service providers who are exempted from holding a license must still comply with the Payment Services Act (PSA) and may be required to submit an application for a license at a later date. Failure to do so may result in penalties or fines.

Conclusion

The new regulations aim to promote a stable and secure financial system while encouraging innovation and growth in the digital payment token industry. By introducing these measures, the MAS is enhancing consumer protection and promoting a robust regulatory framework for digital payment token service providers operating in Singapore.