Any entity that facilitates the transmission, exchange or storage of digital payment tokens (DPT) will now have to be licensed, following enhancements to the Payment Services Act, which was passed by Singapore’s parliament on Tuesday.
Such virtual payment providers will be subject to expanded rules and regulations set by the Monetary Authority of Singapore (MAS), said Minister for Transport Ong Ye Kung during the second reading of the bill.
“This will help minimize the risk of DPT service providers being exploited by criminals to launder illicit proceeds or hide illicit assets,” said Mr. Ong, who is also a board member of MAS. Ong added that the speed and cross-border nature of activities related to the use of such cryptocurrencies have higher inherent money laundering and terrorism financing risks.
MAS currently regulates service providers which deal with the exchange of cryptocurrencies when they possess the money or cryptocurrency. Under the amendment, the authority’s powers are expanded to include regulatory measures on such providers even if they may not posses the money or cryptocurrency involved.
“The bill will broaden the definition of cross-border money transfer service to include facilitating transfers of money between persons in different jurisdictions, where money is not accepted or received by the service provider in Singapore,” said Mr. Ong. “That way, such service providers will come under the regulatory ambit of MAS even if the moneys do not flow through Singapore.”
Other changes to the law include the MAS being given the powers to impose measures on cryptocurrency service providers to “ensure better consumer protection and to maintain financial stability and safeguard the efficacy of monetary policy,” said Mr. Ong. He explained that the risks posed to consumers are currently insignificant due to the relatively low usage of such cryptocurrencies in Singapore, though this could change as industry players introduce products to attract customers.
Crypto assets on the rise
The changes would “enhance the regulatory framework for payment services in line with global regulatory standards and will allow MAS to be nimble and responsive in addressing various risks in the payments landscape,” said Mr. Ong.
Cryptocurrencies have been gaining popularity internationally. Over the past weekend, Bitcoin saw its price pass USD 30,000 for the first time.
Local bank DBS announced last month that it will be launching a digital exchange, which will provide tokenization, trading and custody services to institutional and accredited investors. DBS said Singapore Exchange will take a 10% stake in the digital exchange, while the rest will be owned by the bank.