Singapore Enforces Licensing For Crypto Exchanges

By Kapil Gauhar

Today, Singapore’s latest payments law has been drawn to the force and it needs all cryptocurrency firms operating within the country to be registered.

The Payment Services Act was initially passed in January 2019 and is finally enacted, the MAS (Monetary Authority of Singapore) announced on Tuesday. It offers formal supervisory authority to financial regulators over payments firms, including digital currency.

This act covers “digital payment token services” – efficiently all cryptocurrency businesses as well as exchanges in the country, meaning that they will need to comply with the AML (anti-money laundering) and CFT (counter financing of terrorism) requirements.

Monetary Authority of Singapore believes that digital currencies carry major money laundering risks owing to their anonymous as well as borderless nature of transactions. Thus, all crypto firms will need to be registered and licensed to operate within the country.

Three Classes of Registrations

However, the act doesn’t impose uniform registering requirements. It adopts licensing framework which is based on activity for the different kinds of activities companies undertake as well as risks they pose.

Commonly there are 3 classes of licenses – a currency-changing license, a major payment institution, and a standard payment institution, as per the act.

Loo Siew Yee, the assistant managing director of MAS, said –

“The activity-based and risk-focused regulatory structure allows rules to be applied proportionately and to be robust to changing business models. The PS Act will facilitate growth and innovation while mitigating risk and fostering confidence in our payments landscape.”

The Applicants in Queue

Zipmex, a Singapore-headquartered cryptocurrency exchange, is one of the companies that are planning to apply for the licenses. Regulations brings credibility and legitimacy to the digital assets.

UK-based bitcoin wallet provider Luno and Japan-based cryptocurrency exchange Liquid, which already operate in Singapore, are also reportedly planning to apply for the licenses.

Now, Singapore has become one of the few nations to have regulatory clarity for cryptocurrency firms. Japan, since 2017, has been regulating the cryptocurrency sectory via its PS Act. The EU region, earlier this month, also brought its Fifth Anti-Money Laundering Directive into force. However, the directive has led a few cryptocurrency firms closures and a few have moved their operations out of EU.