Singapore widens crypto regulation, introduces enhanced user protection requirements

Singapore is introducing regulations that appear to be more stringent for companies engaging in cryptocurrency services or digital payment token (DPT) services.

The Monetary Authority of Singapore announced on Tuesday that it is expanding the scope of regulated payment services by introducing amendments to the Payment Services Act and its subsidiary legislation.

The amendments are expected to take effect from April 4 in stages, according to the statement. Specifically, the MAS noted that the new rules would cover custodial services for DPTs, facilitation of the transmission of DPTs, and facilitation of cross-border money transfers between countries “even where moneys are not accepted or received in Singapore.”

“The amendments will empower MAS to impose requirements relating to anti-money laundering and countering the financing of terrorism, user protection and financial stability on DPT service providers,” the MAS said.

The MAS added that it would provide “transitional arrangements” for those conducting activities under the expanded regulatory scope, but they need to inform the regulator within 30 days and file a license application within six months from April 4.

“This expansion has been in the works since 2021 and brings much anticipated regulatory clarity to crypto custody players in Singapore,” Angela Ang, a former MAS regulator and senior policy advisor at blockchain intelligence firm TRM Labs, told The Block.

Consumer protection

In a guideline  released Tuesday, the MAS spelled out terms on the consumer protection measures DPT service providers should take under the Payment Services Act.

The measures include segregating customers’ assets, maintaining proper books and records, and ensuring the integrity and security of customers’ assets. The guideline is expected to take effect on October 4.

(Update: Added comment from Ang)