Singapore Expands Payment Services Act To Include Crypto Custody, Transfers

The Monetary Authority of Singapore (MAS) on Tuesday announced amendments to the Payment Services Act (PS Act) to include custody and transfers in services within the digital payment token (DPT) or cryptocurrency sector.

Under the amended PS Act, the following activities will be placed under the act's scope of regulation: cross-border money transfers between different countries "even where moneys are not accepted or received in Singapore," DPT custodial services, and DPT exchange facilitation "even where the service provider does not come into possession of the moneys or DPTS."

Singapore's central bank stated in its notice that the expanded provisions should "empower MAS to impose requirements relating to anti-money laundering and countering the financing of terrorism (AML/CFT), user protection and financial stability on DPT service providers."

For entities that are currently conducting the aforementioned activities, the regulator will offer "transitional arrangements." The said entities should notify MAS within 30 days and submit a license application within six months from Apr. 4 – when the expanded PS Act comes into force.

Furthermore, companies that will submit an application should attach an "attestation report of the entity's business activities and compliance with" AML/CFT requirements as accomplished by an external auditor, within nine months from Apr. 4. Entities that fail to provide the mentioned documents "are required" to halt their activities once the amended Act comes into effect, the MAS noted.

Singapore was among the jurisdictions that established regulations for the cryptocurrency industry utilizing a consultative approach that crypto observers lauded. It is known as a digital asset hub and is widely called a "pro-crypto" country state. It has expressed intent to become a global crypto hub. However, there have been concerns that some of Singapore's crypto regulations may not be crypto-friendly at all.

Early in 2022, the MAS issued guidelines to emphasize its "expectations" that DPT service providers should not promote their DPT services to the general public in Singapore." It argued that crypto trading is "highly risky and not suitable for the general public."

The central bank also announced in October that it was collaborating with various nations, including the United Kingdom, Switzerland, and Japan to "foster responsible digital asset innovation." It said the partnership only highlights the joint countries' "strong desire" to expand understanding of both the risks and opportunities presented by innovations in the digital asset industry.