Cryptocurrency Regulation in Singapore Prior to 2024

Singapore’s approach to cryptocurrency regulation prior to 2024 was marked by a structured system governing digital payment token (DPT) providers under the Payment Services Act (PSA). The PSA, introduced in 2019, established a cohesive regulatory framework for DPT service providers in Singapore, overseen by the Monetary Authority of Singapore (MAS).

Legal Status and Regulation of DPT Services

Cryptocurrencies were not considered legal tender in Singapore but were recognized as an alternative means of payment. The main law regulating crypto businesses was the PSA. MAS continuously worked to enhance the regulatory framework for DPT services, issuing various notices and guidelines to clarify regulatory requirements. Key guidelines included those on the Prevention of Money Laundering and Countering the Financing of Terrorism for DPT services. In May 2023, MAS issued a Consultation Paper proposing amendments to the Payment Services Regulations 2019. Following this, on July 3, 2023, MAS announced new requirements for DPT services to secure customer assets under a statutory trust to mitigate the risk of loss or misuse and facilitate recovery in case of insolvency​​.

DPT Services and Anti-Money Laundering Requirements

DPT services in Singapore encompassed a range of activities, including operating DPT exchanges, buying or selling DPTs, and providing custodian wallets. The 2021 Amendment Act proposed expanding the definition of DPT services to include transferring DPTs and brokering DPT transactions. DPT providers were mandated to implement comprehensive Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) procedures and policies. This included risk assessment, customer due diligence, transaction monitoring, sanctions screening, and reporting of suspicious transactions. Service providers were required to retain customer information for five years​​.

Licensing and Compliance

To operate in Singapore, DPT service providers needed to acquire one of three types of licenses, depending on their business type: the money-changing license, the Standard Payment Institution (SPI) license, or the Major Payment Institution (MPI) license. The SPI license was suitable for businesses that met certain transaction thresholds and allowed them to provide payment services, including operations with cryptocurrency. Criteria for obtaining these licenses included being a Singapore-incorporated company, having a minimum base capital, and compliance with various assessment criteria set by MAS. DPT service providers could also be granted an exemption from holding a license under the PSA for a specified period​​.

Conclusion

Prior to 2024, Singapore had established a robust regulatory environment for cryptocurrencies, focusing on the safekeeping of customer assets, comprehensive AML/CFT measures, and structured licensing requirements for DPT service providers. The MAS played a pivotal role in continuously updating and refining these regulations to adapt to the evolving landscape of digital currencies.