An Update is coming to Singapore’s Regulatory Framework For Digital Payments
In January 2019, Singapore passed the Payment Services Act 2019 (PSA). An announcement on January 28 revealed an update to the Acts. The update is known as Digital Payment Token (DPT) services, covering every cryptocurrency business and exchange based in the country. The new update comes under existing anti-money laundering (AML) and counter-terrorist-financing (CTF) rules.
Therefore, businesses related to cryptocurrency in the country need to first register, followed by application for a license to operate. Similarly, the Fifth European Anti-Money Laundering Directive (AMLD5) became effective on January 10.
By January 28, companies will have thirty days to register with MAS, declaring that they are based in Singapore and operate a DPT business. Following their registration, they will be grandfathered for six months and also apply for a payment institution license at the same time.
According to the Assistant Managing Director of MAS, Loo Siew, the Payment Services Act offers a flexible regulatory framework for the payments industry. The regulatory structure that is based on activity and focused on risk permits the application of rules in a balanced manner; it enhances robustness for changes to business models. Siew said through the PS Act, there will be growth and innovation, as well as the mitigation of risk and promotion of confidence in Singapore’s payments domain.
Regarding the implementation of cryptocurrency regulations, nations worldwide are going by the recent Financial Action Task Force (FATF) recommendations. The recommendations were provided in Oct. 2018 with an update in Jun. 2019.
Malcolm Wright of Global Digital Finance and Diginex said the Monetary Authority of Singapore is FATF-ready. He mentioned the efforts of MAS to implement the PSA, as well as the consultations for sending origination and beneficiary information.
Wright continued that another consultation launched by MAS some weeks ago led to the addition of some amendments to the PSA concerning digital assets. For further alignment of Singapore with the FATF, part of the amendments includes the transfer of DPTs (including their exchange); the offering of custodial wallets for or on behalf of customers; and the brokering of DPT transactions.
He noted that MAS is somewhat ahead of FATF when it comes to certain criteria, but perhaps some of the other aspects are not up to the intentions of FATF.
People do entertain fear over the possibility of regulation stifling innovation in an emerging domain like cryptocurrency. Bottle Pay, a crypto payments provider based in the UK, announced it was closing down last month due to imminent EU money-laundering rules. Likewise, reports had it that Simplecoin and Chopcoin would shut down for the same reason.
Besides, Deribit based in Netherlands announced its plan to relocate to Panama due to Netherland’s version of AMLD5 being too rigid as a barrier for numerous traders, both regulatory and cost-wise.
However, according to David Carlisle of Elliptic, the AMLD5 regulations are “bread-and-butter requirements,” as well as know-your-customer (KYC) procedures and the monitoring of questionable transactions. He said companies only need to appoint someone to do the tasks.
Featured image courtesy of Shutterstock. Source: Cryptopress.