MAS Introduces New Regulations for Digital Payment Token Service Providers

Jimmy Aki
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On April 2, the Monetary Authority of Singapore (MAS) announced an amendment to the Payment Service Act (PS Act) and its subsidiary legislation to broaden the scope of regulated services and impose user protection on digital payment token (DPT) service providers.

According to the regulatory body, these amendments will take effect in stages from April 4, 2024.

 

MAS Amendments Targets Anti-Money Laundering Enforcement

In its official notice, MAS stated that amendments to the PS Act would extend its regulatory coverage to three main activities.

The provision of custodial services for DPTs would fall under the regulatory framework of the PS Act, thus, companies offering services to hold securely and store DPTs for Singaporean customers will be regulated to ensure the protection and proper management of users’ digital assets.

In addition, the amendment will cover all services that ease the flow of DPTs between accounts and the exchange of DPTs, even when the service provider does not physically hold the assets. This includes services that enable the transfer of DPTs between different accounts or the exchange of DPTs.

The PS Act will also process cross-border money transfers between countries, even when funds are not “accepted or received” in the Asian country.

In light of these amendments, MAS will have the authority to enforce anti-money laundering (AML) and countering the financing of terrorism (CFT) measures in Singapore. This also aligns with the move of the regulatory body to create a generative AI risk framework in the financial sector of the country.

Additionally, the financial agency will further protect users against losses in the digital market while upholding the financial stability of all registered DPT service providers.

These amendments are coming after the MAS unveiled new measures for digital token services in Singapore in July 2023.

 

MAS Impose 30-Day Notification Deadline

The amendment to the PS Act includes a transitional arrangement for all “entities” currently conducting activities that fall under the Act’s latest extended regulatory reach.

According to the notice, these arrangements require such entities to notify the MAS within 30 days and submit a license application within six months from April 4 in order to continue DPT activities while the agency reviews their license applications.

All submitted licenses must include attestation reports of every service provider’s business activities and compliance with AML and CFT requirements.

The report must be completed by a qualified external auditor and submitted within nine months from April 4.

Meanwhile, MAS has also revealed the penalty for noncompliance with these new amendments.

The financial watchdog stated that,

“Entities that do not fulfil the requirements above are required to cease the activities when the amendments come into effect.”

Furthermore, the MAS will provide amendments to customer asset protection of payment token service providers.

This involves measures like dividing customer assets and storing them in a trusted account, maintaining accurate records, and ensuring that effective systems and controls are implemented to protect the security of customers’ assets.

OKX Exchange Joins List of Approved Entities in Singapore

The Singaporean market has seen many crypto companies acquiring licenses to offer DPT services. These include Crypto.com, Ripple, and Coinbase, which have obtained complete payment institution licenses in the Asian country.

Crypto.com obtained a Major Payment Institution (MPI) license on June 1, 2023, Coinbase acquired the full MPI license on October 1, and Ripple received a full operational license on October 4 of the same year.

Similarly, OKX exchange acquired in-principle approval from MAS for an MPI license through its local subsidiary, OKX SG, on March 13, 2024.

The MPI license allows service providers to process multiple payment activities that exceed the volume limitations set for payment firms, meaning that OKX could exceed the 3 million Singaporean dollars (about $2.2M) cap for any payment service and the monthly cap of 6 million SG$(about $4.4M) for two or more payment services.

OKX President Hong Fang noted:

“Singapore is a priority market and we’ve been investing here for some time. The in-principle approval from MAS is not only a validation of our commitment to date, but also an exciting opportunity for us to continue as a responsible contributor to the Singapore crypto ecosystem.”

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.