In Singapore, virtual asset service providers (VASPs) are regulated under the Payment Services Act and must obtain a license to operate legally. The Monetary Authority of Singapore (MAS) is the regulatory body responsible for overseeing virtual asset-related activities in Singapore.
Working with MAS can be a comprehensive and structured process. MAS is the regulatory authority in Singapore responsible for overseeing financial activities, including virtual asset-related services. The regulatory environment for Virtual Assets Service Providers (VASPs) in Singapore is designed to promote innovation while ensuring the integrity and stability of the financial system.
Licensing and regulatory framework: MAS has established a licensing framework under the Payment Services Act (PSA) to regulate VASPs. VASPs are required to obtain a license from MAS to provide specific virtual asset services.
Licensing process: The process of obtaining a VASP license involves applying to MAS, which includes detailed information about the VASP’s business operations, compliance measures, and other relevant aspects. MAS assesses the application based on various factors, including fit and proper criteria, financial stability, AML/CFT measures, and risk management.
The regulatory environment for VASPs in Singapore is known for its forward-thinking approach, emphasizing both innovation and regulatory compliance. MAS actively engages with industry participants, promotes dialogue, and provides guidance to foster a conducive environment for the development of virtual asset services.
It is crucial for VASPs operating in Singapore to stay updated with regulatory developments, engage with MAS through appropriate channels, and seek legal and regulatory advice to ensure compliance with the evolving regulatory landscape.
The requirements for obtaining a VASP license in Singapore include:
- Corporate registration: The VASP must be registered as a company in Singapore.
- Fit and proper criteria: VASPs and their officers, directors, and shareholders must meet the fit and proper criteria, which include having a good track record, being financially stable, and having relevant experience and qualifications.
- Minimum capital requirements: VASPs are required to have a minimum base capital of SGD 100,000 (approximately USD 73,500) or more.
- Robust AML/KYC procedures: VASPs must have effective anti-money laundering (AML) and know-your-customer (KYC) procedures in place to prevent illicit activities.
- Effective cybersecurity measures: VASPs must have robust cybersecurity measures in place to protect against cyberattacks and ensure the safety of customer assets.
- Maintenance of customer assets: VASPs must have policies and procedures in place for the maintenance and protection of customer assets, including maintaining adequate insurance coverage.
- Ongoing monitoring and reporting: VASPs are required to conduct ongoing monitoring and reporting of suspicious transactions and other activities that may be indicative of illicit activity.
- Compliance with other regulations: VASPs must comply with other applicable regulations, such as tax and securities regulations.
- Local office requirement: VASPs must have a physical office in Singapore and maintain a local presence in the country.
- Ongoing supervision: Once licensed, VASPs are subject to ongoing supervision and regulatory oversight by MAS. This includes periodic reporting, audits, and assessments to ensure continued compliance with regulatory requirements.
- Regulatory sandbox: MAS also operates a regulatory sandbox, known as the FinTech Regulatory Sandbox, which allows VASPs and other financial technology firms to test innovative solutions in a controlled environment.
The tax rates for businesses, including Virtual Asset Service Providers (VASPs), in Singapore are as follows:
- Corporate Income Tax: The standard corporate income tax rate in Singapore is 17% on chargeable income. However, Singapore has a progressive tax system with various tax incentives and schemes that may result in effective tax rates lower than the headline rate.
- Goods and Services Tax (GST): VASPs providing taxable goods or services in Singapore may be required to register for Goods and Services Tax (GST). The current GST rate in Singapore is 7%. However, specific GST requirements for VASPs may vary depending on the nature of their activities and transactions.
- Withholding Tax: VASPs operating in Singapore may need to withhold tax on certain payments made to non-resident individuals or entities. The withholding tax rate varies depending on the nature of the payment and any tax treaties that Singapore has with the recipient’s country.
It’s important to note that tax obligations and rates may be subject to change. It is recommended that you consult with tax professionals or engage with the Inland Revenue Authority of Singapore (IRAS) to obtain the most accurate and up-to-date information regarding tax rates, obligations, and incentives specific to your business activities in Singapore.
Obtaining a Virtual Assets Service Providers (VASP) license in Singapore can offer several benefits to businesses. Some of the key benefits include:
- Regulatory Compliance: Operating with a VASP license demonstrates regulatory compliance and enhances the reputation and credibility of the business. It provides assurance to clients and counterparties that the VASP operates within the legal framework and adheres to relevant regulations.
- Access to Singapore’s Financial Ecosystem: Singapore is known for its robust and well-regulated financial ecosystem. Holding a VASP license allows businesses to tap into this ecosystem and participate in the vibrant financial and fintech industry in Singapore. It provides opportunities for collaboration, partnerships, and access to potential customers and investors.
- Investor Confidence: Having a VASP license can instill confidence in potential investors, as it signifies that the business operates under a regulated framework. It may attract investment opportunities and partnerships with established financial institutions or venture capitalists interested in the virtual assets space.
- Enhanced Customer Trust: A VASP license demonstrates a commitment to customer protection, security, and compliance. It can help build trust among customers who prioritize working with regulated entities and are more likely to engage with licensed VASPs for their virtual asset needs.
- Access to Regulatory Support: Holding a VASP license means having access to regulatory support and guidance from the Monetary Authority of Singapore (MAS), the regulatory authority in Singapore. MAS actively engages with licensed VASPs, provides regulatory updates, and offers platforms for industry collaboration and feedback.
- Participation in Regulatory Sandboxes: Singapore’s regulatory environment includes sandboxes that allow licensed VASPs to experiment with innovative financial products and services under controlled conditions. This provides opportunities for testing new ideas, technologies, and business models while receiving guidance and support from regulatory authorities.
- International Recognition: Singapore is well-regarded globally for its regulatory standards and adherence to anti-money laundering (AML) and counter-terrorism financing (CFT) measures. Holding a VASP license in Singapore can enhance international recognition and facilitate business activities with counterparties in other jurisdictions.
Why choose us?
At Porat Group, we understand the unique challenges and intricacies of the MAS regulatory framework. Our team of seasoned attorneys specializes in the evolving virtual assets space and possesses an in-depth knowledge of the specific requirements set forth by MAS. With our comprehensive understanding of MAS regulations, we provide strategic guidance and tailor-made solutions to streamline your VASP license application process.
By choosing Porat Group, you gain a distinct advantage. Our attorneys stay at the forefront of regulatory updates, enabling us to provide you with the most up-to-date advice and guidance. We closely monitor MAS guidelines and industry developments, ensuring that your VASP license application adheres to the latest regulatory requirements.
Beyond our expertise in MAS regulations, our commitment to exceptional client service sets us apart. We take the time to understand your unique business needs, risk profile, and growth aspirations. With this understanding, we craft a comprehensive compliance strategy tailored to your specific circumstances, allowing you to achieve regulatory compliance seamlessly and efficiently.
Porat Group’s teams also adds value in terms of:
- Assistance with hiring management and staff;
- Finding and connecting to technologies and platforms;
- Acting as a potential partner when it comes to referring clients/merchants.