Singapore has taken a more progressive and cryptocurrency friendly stance than most of its regional neighbors, that have in many cases banned cryptocurrency activities and businesses completely. In Singapore, however, both cryptocurrency exchanges and cryptocurrency trading is legal, and while cryptocurrencies (usually referred to as “digital tokens”) are not classified as a legal tender, the authorities see at least Bitcoin as a good, thus applying Goods and Services Tax (=the local version of VAT) to Bitcoin.
All this has contributed to Singapore becoming perhaps the most important cryptocurrency hub in Asia in recent years.
The local Payment Services Act that regulates cryptocurrency exchanges (known in the city-state as digital payment token – DPT- service providers) came into effect in 2020 and also regulates traditional payment services.
The act places cryptocurrency exchanges with a “meaningful presence” in Singapore (meaning offices, directors etc.) under the oversight of the Monetary Authority of Singapore or MAS for short, the regulator issuing the relevant licenses, and also the country’s Central Bank.
MAS has chosen to apply existing legal frameworks for cryptocurrency exchanges where possible but the Payment Services Act made it clear that all cryptocurrency businesses are required to obtain a license from the Monetary Authority of Singapore, as well as follow all regulations related to Anti Money Laundering and Counter Funding Terrorism measures. The regulator also has the right to ban individuals deemed as unsuitable from engaging in cryptocurrency businesses.
The Payment Services Act is not the only law that cryptocurrency exchanges must follow, additionally also the Financial Advisers Act, Insurance Act, Securities and Futures Act and the Trust Companies Act apply to these companies.
Those wishing to obtain a license for DTP services providers must fulfill the following requirements, no matter which license is chosen:
If the above sounds like a good fit for your cryptocurrency exchange and/or you would like to compare Singapore as a jurisdiction with other jurisdictions that may be relevant for regulating your cryptocurrency exchange you are welcome to contact us for more information.
We also offer consulting services related to banking and payments in Singapore, as well as for other service providers you may need should you decide to register a company in the city-state and regulate your cryptocurrency exchange there.