Singapore has officially broadened its regulatory net to encompass custodial services and other cryptocurrency-related activities, a move that positions the city-state at the forefront of crypto regulation. The Monetary Authority of Singapore (MAS) declared that entities engaging in crypto custody, cross-border money transfers, and the facilitation of crypto transactions between accounts and exchanges will now require licenses to operate. This regulatory shift, aimed at enhancing user protection and financial stability, comes after the legislation, passed in parliament in 2021, finally went into effect.
A New Regulatory Era
With the introduction of amendments to the Payment Services Act (PS Act), Singapore sets a new precedent in the supervision of digital payment tokens and cryptocurrency service providers. These changes, long anticipated by the crypto sector, aim to clarify and secure the operational landscape for entities within the crypto ecosystem. Angela Ang, a senior policy adviser at TRM Labs and a former MAS regulator, highlighted the significance of these adjustments for providing regulatory clarity, especially for custody services.
Strengthening User Protection and Stability
The amendments introduced by the MAS encompass a range of measures designed to bolster user protection and ensure financial stability within the burgeoning crypto market. Key among these measures are requirements for segregating customer assets, maintaining accurate books and records, and implementing effective systems and controls. These provisions are set to be enacted within six months from April 4, 2024, marking a crucial step toward safeguarding participant interests in the crypto domain.
Transition and Compliance
Entities currently operating under the Payment Services Act must initiate a transition process within 30 days and submit a license application within six months from April 4, 2024. This transitional phase allows for the continued operation of crypto-related activities while applications are under review. Additionally, these entities will need to provide an attestation report, verified by an external auditor, to affirm compliance with anti-money laundering and counter-terrorism financing requirements within nine months.
Non-compliant entities face a stark ultimatum: adapt to the new regulatory framework or cease operations. This move by the MAS underscores Singapore’s commitment to leading the charge in crypto regulation, balancing innovation with the need for security and stability in the financial landscape.
