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Singapore’s Digital Payment Token (DPT) Regulation: A Guide to Licenses and Compliance

In its bid to establish itself as a global financial hub, Singapore has introduced a robust regulatory framework for digital payment tokens (DPTs). The city-state has categorized DPT service providers into three types of licenses based on risk and transaction volume. These licenses are designed to ensure the integrity and security of DPT transactions.

License Categories: Money-Changing, SPI, and MPI

The Monetary Authority of Singapore (MAS) issues three types of licenses for DPT service providers:

  • Money-Changing: Limited services with a narrow scope; simple regulations apply.
    • Offers basic services with minimal regulatory requirements.
  • SPI (Standard Payment Institution): Offers flexibility for smaller businesses; provides most services but stays below specific transaction thresholds. Moderate regulations apply.
    • Suitable for smaller businesses that want to provide a range of DPT services without excessive regulatory burdens.
  • MPI (Major Payment Institution): Handles large transactions; subject to stricter regulations due to higher risks.
    • Designed for large-scale DPT service providers who need to handle high-volume transactions and are subject to more stringent regulations.

Who is Affected?

Directly Affected

  • DPT service providers, including:
    • Operating DPT exchanges
    • Buying or selling DPTs for fiat currency or other DPTs
    • Transferring DPTs (proposed, not yet in force)
    • Providing custodian wallets for DPTs (proposed, not yet in force)
    • Brokering DPT transactions (proposed, not yet in force)

Indirectly Affected

  • Financial institutions: Banks and other financial institutions facilitating transactions involving DPTs may need to comply with Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) regulations.
  • Technology providers: Companies developing blockchain or crypto-related technologies may need to consider regulatory implications.
  • Individuals and businesses using DPTs: While individual investors generally don’t need licenses for personal trading, businesses using crypto as payment or exceeding specific transaction limits might face regulations.

Important Singapore Crypto Regulations

Singapore has established a robust regulatory framework to govern the ever-evolving landscape of cryptocurrencies. Some key regulations include:

  1. Payment Services Act (PSA): Mandates licenses for a spectrum of activities, including the operation of exchanges, buying and selling of DPTs, and providing wallets.
  2. Securities and Futures Act (SFA): Regulates specific digital payment tokens that exhibit features akin to capital market products such as securities or derivatives.
  3. Commodity Trading Act: Applies to trading activities involving asset-backed DPTs in Singapore.

Conclusion

Singapore’s regulatory framework for DPTs aims to foster innovation while ensuring the integrity and security of transactions. Navigating these regulations can be complex, but financial companies can leverage KYC Hub’s Crypto Compliance Solutions to ensure efficient, secure, and cost-effective compliance. Offload compliance and strengthen your operations with KYC Hub’s AI-powered solutions.

  • UK Crypto Regulations
  • Cryptocurrency Regulations in India
  • Stages of Money Laundering
  • Financial Crime
  • Enhanced Due Diligence
  • AML Transaction Monitoring