The Monetary Authority of Singapore will regulate the operations with cryptocurrencies in that country to “enhance the regulatory framework for payment services.”
The legislation that seeks to regulate the operation of cryptocurrency firms in Singapore came into effect this January 28th.
This new Payment Services Act has the objective to regulate cryptocurrency payments and trading enterprises following some aspects of the regulatory regime that currently governs traditional payments services and requires them to hold a license.
On the other hand, there are other special laws that crypto operations must comply with. Some of them are the Financial Advisers Act, Insurance Act, Securities, and Futures Act, and the Trust Companies Act.
Through this new rule, crypto services are under the oversight of the Monetary Authority of Singapore. Among other details, the regulator announced this January 28th that the new framework is expected to “enhance the regulatory framework for payment services in Singapore, strengthen consumer protection, and promote confidence in the use of the payments”, as a press release explains.
Loo Siew Yee, who is the regulator’s Assistant Managing Director, said: “The Payment Services Act provides a forward-looking and flexible regulatory framework for the payments industry. The activity-based and risk-focused regulatory structure allows rules to be applied proportionately and to be robust to changing business models. The PS Act will facilitate growth and innovation while mitigating risk and fostering confidence in our payments landscape”.
Requirements of the License
According to the press release, the new regulations require cryptocurrency-related firms to apply for operating licenses such as a money-changing license, a standard payment institution license, and a major payment institution license.
Japanese cryptocurrency exchange firm Liquid and its London-based competitor Luno plan to apply to this act, according to a Bloomberg report. About this aspect, Liquid CEO, Mike Kayamori said: “We welcome the Act with open arms”.
Different countries are regulating the cryptocurrency space, which, as a consequence, is becoming increasingly regulated. Many jurisdictions are setting licensing requirements for those who want to participate in cryptocurrency businesses.
One very known case is the stringent BitLicense, introduced in the state of New York, which the regulator amended for the first time in nearly five years in December 2019. BitLicense is a business license for using cryptocurrencies with a lengthy list of terms and conditions.
Another example is Malta, a country that introduced licensing requirements for cryptocurrency businesses in July 2018 and received queries from 21 cryptocurrency exchanges seeking authorization to operate in the country, which has opened its doors to blockchain technology and all cryptocurrencies.
Besides, Japanese cryptocurrency exchanges are required to register with the Financial Services Agency since the introduction of that country’s Payment Services Act in April 2017, introducing a regulatory regime for virtual currency (VC) businesses and making Japan the first developed country to do so.
Finally, the intention of some of those governments is to avoid money laundering and also be sure that crypto users pay their taxes and do not try to affect other users.
By María Rodríguez