In 2019 and 2021, the Monetary Authority of Singapore (MAS) further improved the Payment Services Act (PSA), proposing that any institution engaged in the transmission, trading or storage of cryptocurrencies must submit a Singapore licence in accordance with the latest improved Payment Services Act (PSA) guidelines.
Apply for a licence from the Monetary Authority of Singapore (MAS).
Since then, blockchain companies have submitted applications for digital currency payment licenses to the Monetary Authority of Singapore (MAS). This article will elaborate on the types of payment services regulated by the Singapore MAS, the corresponding licenses and sandbox plans.
— Regulated payment services and license types —
The PSA released by MAS lists a total of 7 payment service business types and 3 license types. Applicants need to ensure that the applied license can meet their business needs within a reasonable period of time.
Summary: Determine the type of license application
Generally speaking, the business of digital currency exchanges isF business: Digital payment token service (payment digital currency service).
If it involves fiat currency transactions and OTC business exchanges, the corresponding business isBusiness A: Account issuance service (account issuance service) and business C: Cross-border money transfer service (cross-border transfer service).
In all the above cases, you need to apply for "Standard Payment Institution License SPI"or"Large Payment Institution License MPI":
1. If you meet any of the following conditions, you need to apply for MPI.
- Engaged in one type of business with a monthly transaction volume of more than 3 million SGD
- Engaged in two or more business types with a monthly transaction volume of more than S$6 million
- Engaged in electronic money issuance business, with an average daily electronic money transaction volume of more than S$5 million
2. If the above conditions are not met, you only need to apply for SPI.
These two types of licenses can provide payment token-related services to meet the business needs of exchanges, but the "Large Payment Institution License MPI" breaks through quota supervision and is more conducive to the business development of digital currency exchanges.
Summary: Things to note when applying for and holding a license
1. Licensed exchanges cannot conduct contract trading business
The digital currency business defined by PSA focuses on spot business, so after obtaining the license,Unable to conduct derivative contract trading business.
To conduct contract trading business in Singapore, you must apply for a certifiedRecognised Market Operator (RMO) LicenseThe competent authority of this license is also MAS. RMO is a license for traditional capital market operations. It is not ruled out that the "conducting contract business" will be added after the issuance and management of payment licenses are stabilized, so applying for a payment license now is a ticket for long-term layout.
2. Licensed institutions are not allowed to conduct non-payment token transactions
The term digital payment token (DPT) is used throughout the PSA, which clarifies that the digital currency transactions that can be carried out by applying for a license are limited to payment tokens (such as BTC, ETH, etc.).Securities token trading is not within the scope of this license.
Licensed institutions are limited to payment token transactions. If they list securities token trading services, there will be regulatory risks.
One of the items in the license application materials is to "provide a complete list of listed currencies and a legal opinion on the nature of the tokens." It is reported that many exchanges do not review the legal opinions when listing coins, so if you want to apply for a license and do not affect existing token transactions, you need to complete it as soon as possible.
3. Difficulties in applying for a license for a digital currency exchange
MAS has strict regulations on KYC/AML, system security and technology risk management (TRM), and companies need to take various countermeasures, technology upgrades and other systemic changes.
At the same time, corporate management needs to communicate effectively with MAS officials. For MAS officials, digital currency trading is a completely new field, and it is a big challenge to communicate and report with them in a language they can understand and make some adjustments in accordance with regulatory requirements.
In addition, the Singapore Securities Regulatory Commission and regulators focus on Technology Risk Management (TRM) and System Pentration Test. System integrity, data protection and business emergencies have been merged into these two points.
— Sandbox Regulatory Mechanism —
Singapore's fintech sandbox regulatory mechanism aims to give new fintech technologies the opportunity to be used in real scenarios, but in order to control risks, its scope and time of use are limited.
As long as any Fintech company registered in the sandbox is allowed to engage in business that conflicts with current laws and regulations with prior notification, and even if the relevant business is terminated by the authorities in the future, no legal liability will be pursued.
If the companies under the sandbox supervision system have good results after operating for a period of time, they can apply for relevant licenses from the Monetary Authority of Singapore. After the sandbox supervision expires, technology finance companies will lose this special exemption. If they continue to operate, they can only comply with the established legal system.
Sandbox regulatory service objects
The sandbox supervision system is divided into regular sandbox supervision and quick sandbox supervision.
Conventional sandbox regulation is suitable for complex business models. Express sandbox regulation is for fintech activities with lower market risks and simpler business models, including insurance brokerage service agencies, recognized market operators and remittance agencies. The regulation focuses on full disclosure of information and pre-established rules, and the regulation is more flexible.
Blockchain projects are more suitable for quick sandbox supervision. In 2019, BondEvalue became the first blockchain-related company approved to enter the "Quick Sandbox", further clarifying the Singapore government's positive policy attitude towards digital currency exchanges.
Quick sandbox application process
With standardized information disclosure and preset rules, the Quick Sandbox will allow startups to learn the review results within 21 days of submitting their application and conduct product or service testing after approval.
In addition, MAS has set a 3-month cooling-off period for all institutions whose applications are not approved. During this period, MAS will not accept sandbox qualification applications from the institution. If the approved institution does not operate in accordance with the requirements of the fast-track sandbox, MAS has the right to withdraw its sandbox institution qualification.
— Written at the end —
As an Asian financial center, Singapore has friendly and flexible compliance supporting policies. For exchanges and institutions with strength and international vision, a compliance layout in Singapore is a reflection of their own strength, different from other non-compliant institutions, and will obtain a valuable long-term development pass.
AiYing Compliance focuses on providing compliance services for crypto institutions going overseas, including crypto fund trust compliance, crypto-friendly bank account opening, cooperation with overseas licensed institutions, and overseas market legal affairs.
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