Singapore Act to License Cryptocurrency Firms Comes Into Effect

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Legislation regulating the operations of cryptocurrency firms in Singapore comes into effect today, Jan. 28.

The new Payment Services Act will regulate cryptocurrency payments and trading enterprises under some aspects of the regulatory regime that currently governs traditional payment services and require them to hold a license.

Crypto payment services must also comply with the Financial Advisers Act, Insurance Act, Securities and Futures Act and the Trust Companies Act.

The new rules place crypto services under the oversight of the Monetary Authority of Singapore. The regulator announced in a press release published earlier today that the new framework is expected to “enhance the regulatory framework for payment services in Singapore, strengthen consumer protection and promote confidence in the use of e-payments.” The regulator’s Assistant Managing Director Loo Siew Yee said:

“The Payment Services Act provides a forward-looking and flexible regulatory framework for the payments industry. 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.”

Licensing requirements

The new regulations require cryptocurrency-related firms to apply for operating licenses such as a money-changing license, a standard payment institution license and a major payment institution license.

According to a Jan. 27 Bloomberg report, Japanese cryptocurrency exchange Liquid and its London-based competitor Luno reportedly plan to apply. Liquid CEO Mike Kayamori said, “We welcome the Act with open arms.”

As the cryptocurrency space becomes increasingly regulated, many jurisdictions are setting licensing requirements for cryptocurrency businesses. Particularly famous is the case of the stringent BitLicense introduced in the state of New York, which the regulator amended for the first time in nearly five years in December 2019.

Malta introduced licensing requirements for cryptocurrency businesses in July 2018 and received queries from 21 cryptocurrency exchanges seeking authorization to operate in the country. Japanese cryptocurrency exchanges are required to register with the Financial Services Agency since the introduction of that country’s Payment Services Act in April 2017.