Singapore expands regulation on cryptocurrency to include custodial services and cross-border transfers
The amendments to the Payment Services Act impose strict requirements on cryptocurrency service providers, with a particular focus on custodial services. The changes will take effect from April 4, 2024. Existing entities must begin a transition process and submit a license application within six months. Failure to comply with requirements will result in the cessation of activities.
The Monetary Authority of Singapore (MAS) has announced the expansion of its regulation on cryptocurrency-related activities to include custodial services and cross-border money transfers. The amendments to the Payment Services Act (PS Act) aim to provide regulatory clarity and user protection in the cryptocurrency sector.
Under the new regulations, digital payment token (DPT) or cryptocurrency service providers will be required to comply with user protection and financial stability-related requirements. These include segregating customers’ assets in a trust account, maintaining proper books and records, and ensuring effective systems and controls are in place.
The expansion of the regulations is seen as a response to the volatility and turmoil experienced in the cryptocurrency sector, including the crash of FTX. By broadening the scope of regulation, Singapore aims to address regulatory gaps and promote stability in the cryptocurrency ecosystem.
Angela Ang, a senior policy adviser for blockchain intelligence firm TRM Labs and a former MAS regulator, expressed that the expansion of the regulations is a long-awaited development that provides regulatory clarity to key aspects of the crypto ecosystem, particularly custodial services.
The amendments are scheduled to take effect within six months from 4th April 2024. Existing entities engaged in crypto-related activities under the Payment Services Act are required to initiate a transition process within 30 days and submit a license application within six months. To obtain the license, these entities must demonstrate compliance with anti-money laundering and countering the financing of terrorism requirements, which will be validated by an external auditor within nine months.
Failure to comply with the requirements will result in entities being required to cease all cryptocurrency-related activities
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