Ever since the explosion of cryptocurrency, the world has been in a constant state of flux regarding cryptocurrency regulation. Governments worldwide have come to terms with the fact that cryptocurrency is something that they cannot keep under the rug. As a result, multiple countries are imposing regulations and a tight fee structure on crypto to keep it under control. While many countries are imposing restrictions on the trade of crypto, Singapore has emerged as a safe haven for the digital asset and the people who want to deal in Crypto. In this blog, we will take a look at the cryptocurrency regulations imposed in Singapore.
Regulatory Authorities
Before learning about the cryptocurrency regulations in Singapore, we have to learn about the authorities and bodies that regulate cryptocurrency in Singapore.
The Payment Service Act
PSA, or the Payment Service Act, forms the basis of cryptocurrency regulations in Singapore. Enacted in 2019 and came into effect in 2020, this act regulates every aspect of cryptocurrency within the country. Essentially, it’s a rule book that dictates to the authorities and regulators how to regulate cryptocurrency in Singapore. It ensures that everyone who deals with cryptocurrency in the country is safe and secure. To achieve this, the act is divided into 2 categories: Designation Framework, which identifies and regulates payment systems used in Crypto trading. The other one is the Licensing Framework, which essentially identifies and regulates payment services based on transaction size.
Monetary Authority of Singapore (MAS)
This is the primary regulating authority for cryptocurrency in Singapore. It works on the principles of the PSA and assumes a central role in overseeing and shaping the country’s cryptocurrency landscape. As a central regulatory authority in Singapore, MAS has authority over businesses engaged in digital payment token services, which encompass activities like trading DPT and wallet generation.
Singapore Police Force
Singapore Police Force, or SPF, is a central-level authority that prosecutes and investigates criminals involved in cryptocurrency fraud, scams, and money laundering. SPF works closely with other cryptocurrency regulation authorities in the country to ensure the effective enforcement of cryptocurrency regulations and laws.
Key Cryptocurrency Regulations and Recent Updates
The CEO of Ripple, Brad Garlinghouse, has said that the cryptocurrency market will reach $5 trillion by the end of 2024 or in the first half of 2025. This makes regulations extremely important. Let’s have a look at the cryptocurrency regulations placed by Singapore.
Licensing
The first regulation is the licensing types. MSA categorises all transactions into two license types based on transaction volume: Standard and Major Payments. As of November 2023, the MAS announced plans to improve the regulations for DPT providers, mainly those who are categorised as major payment institutions. This shows that the MAS is focused on providing the right financial safeguards and plans to be compliant with international standards like the Financial Action Task Force’s recommendations for Anti-Money Laundering and Combating the Financing of Terrorism.
AML And CFT Measures
One of the biggest problems with adopting cryptocurrency is that it is being used for unethical means, like funding terrorists and laundering money. The MAS has made it necessary for all DPT service providers to carry out robust KYC (Know Your Customer) procedures and monitor transactions to reduce the risk of any unethical practice and mitigate the risks of potential financial crimes.
Travel Rule
Cryptocurrency is one of the most global currencies; no matter where you live, you can always trade in cryptocurrency. However, Singapore has been one of the first countries in the world to introduce a regulation to safeguard international transactions. In 2020, the MAS had enforced the ‘Travel Rule.’ Under this rule, it is mandatory for virtual assets service providers to exchange information about the originator and beneficiaries during crypto transfers. This promotes transparency and facilitates the identification of the originator and beneficiary in the case of international cryptocurrency trade.
A Safe Future Ahead
These regulations imply that the country is trying to make cryptocurrency trading more transparent and secure, which aids the people who trade in it. The list of benefits is massive, but here are a few key benefits of cryptocurrency regulations:
Enhanced Credibility: The regulations will make the crypto landscape more trustworthy and safe, whichwill attract more investors and users who seek a safe trading environment.
Less Crime: Unfortunately, cryptocurrency has many criminal implications. Introducing apt cryptocurrency regulations fosters a safe environment and assures quick response in case of fraud, scam, or any other criminal activity.
Talent Pool: One of the biggest benefits of cryptocurrency regulations is that a safe trading environment will make the industry more appealing to a new and talented workforce, which will introduce more innovations in the field.
