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Singapore Monetary Authority (MAS) announced today an initiative aimed at bringing more clarity and oversight to the growing cryptocurrency industry in the country by expanding the scope of its crypto-related activities. The expansion of the regulation does not include the acquisition or sending of crypto within Singapore, but it does cover the regulation of custody services and provides clear regulations for cross-border money transfers and transfers between accounts and cryptocurrency exchanges.
Regulatory Changes Were Expected to Take Effect in 2021
The latest change in the crypto regulation scope stems from amendments made to the Payment Services Act (PS Act) in 2021, which aimed to regulate payment service providers. The changes were initially planned to take effect in the fourth quarter of 2021 but have been delayed until today.
The delay in implementation was due to turmoil in the cryptocurrency sector, including the collapse of major crypto exchanges and companies like FTX, which led to comprehensive regulatory adjustments worldwide.
Blockchain intelligence firm TRM Labs’ senior policy advisor and former MAS official Angela Ang sees the expansion, especially the regulatory clarity for custody services, as a long-awaited move for the crypto ecosystem.
New Conditions Imposed on Crypto Service Providers
The changes introduced by MAS impose a number of conditions related to user protection and financial stability on digital payment token (DPT) or cryptocurrency service providers. These conditions include holding customers’ assets in trust accounts, maintaining proper books and records, and implementing effective systems and controls. The changes will come into effect within six months from April 4, 2024.
Organizations currently engaged in cryptocurrency-related activities under the Payment Services Act will need to initiate a transition process within 30 days and apply for a license within six months to continue operations temporarily while awaiting review. These organizations will also need to submit a compliance report approved by an external auditor on anti-money laundering and counter-terrorism financing requirements within nine months.
As stated by MAS, non-compliance with these regulatory requirements will result in the suspension of all crypto-related activities for companies. These stringent measures are part of the commitment to building and promoting a regulated and secure environment for cryptocurrency transactions in Singapore, balancing innovation with investor protection and financial integrity.
