Singapore’s Payment Services Act Extends Coverage to Token Custody and Transfers

The Monetary Authority of Singapore (MAS) has announced plans to update the Payment Services Act (PS Act) in order to extend the regulations surrounding digital payment tokens (DPT) and their service providers. Starting from April 2, several activities related to DPTs will fall within the scope of the PS Act, including services like custodial services, token transfers, exchange facilitation, and cross-border money transfers. The MAS has also made it clear that these regulations apply regardless of whether the service provider physically possesses the funds or whether the money is accepted or received within Singapore. The amendments will empower the central bank to impose additional requirements on DPT service providers, such as anti-money laundering measures, user protection, and financial stability safeguards.

The implementation of the amendments will take place in stages, commencing on April 4. The MAS has stated that transitional arrangements will be made for entities impacted by the expanded scope. These entities are required to notify the central bank within 30 days and apply for a license within six months of April 4 if they wish to continue operating during the review process. Non-compliant companies will face closure. The regulator will also introduce amendments to protect customer assets held by payment token service providers, including the segregation of assets, maintenance of records, and security measures. These asset protection amendments will come into effect six months after April 4.

Crypto companies are actively obtaining licenses in order to offer their services in the Singaporean market. Notable organizations, such as Crypto.com, Coinbase, and Ripple, have successfully obtained payment institution licenses in the country. Crypto.com secured its Major Payment Institution (MPI) license in June 2023 after meeting the necessary requirements. Ripple received formal approval on October 4, while Coinbase acquired a full MPI license on October 2, 2023. These licensing endeavors demonstrate the commitment of crypto companies to comply with the evolving regulations and ensure the safety and legitimacy of their operations in Singapore.

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