The compliance exchange is about to appear in Singapore?

On December 18, 2019, the official website of the Monetary Authority of Singapore (hereinafter referred to as "MAS") issued an announcement announcing that the "Payment Services Act" will be formally implemented from January 28, 2020. You must apply for a license to make your operations compliant. According to the requirements, all exchanges seeking compliance must submit application filing documents before February 27, 2020, and MAS has clearly stated that it will not be accepted after the deadline. MAS will announce successful applicants in June 2020, and successful applicants are expected to start business in mid-2021.

I. About MAS

MAS is the Central Bank of Singapore and the Financial Supervisory Authority. It fully exercises the functions and powers of a general central bank, and has two major functions of financial regulation and financial supervision. Its responsibilities include supervision of banks, financial companies and other financial institutions. Formulate and implement corresponding monetary policies to maintain the stability of a country's economy and ensure sustainable economic development.

The governance model adopted by MAS is the board of directors-the office of the executive president-all functional departments. The board of directors consists of government officials, senior members of the financial sector, and the legal profession. On October 1, 2002, after MAS merged the board of monetary institutions, MAS was able to issue currency. Prior to that, the board of monetary institutions was the only new currency issuer established under the currency law promulgated in March 1967.

Problems with digital currency services in the eyes of MAS

In the past few years, fintech has developed rapidly. With the rise of digital currencies, the pattern of payment services is also being changed. MAS has said at a press conference that emerging payment tools and business models are blurring the regulatory boundaries of existing bills.

MAS believes that the following three types of obvious problems exist in digital currency services:

1. Because digital currency transactions are mostly completed via the Internet, there is a risk of transaction irreversibility and default , especially for cross-border transactions, which are more difficult to track and difficult to monitor. Therefore, digital currency is very likely to be used by criminals and become a tool for illegal activities such as money laundering.

2. Any digital currency will eventually need to be converted into fiat currency, so there is a risk of insufficient liquidity and exchange rate fluctuations , and the pricing of the collateral held by the digital currency issuer is not true, causing market risks.

3. Under the current circumstance of inadequate supervision, the digital currency issuance and transaction process is opaque, and there may be the possibility of being manipulated by interested parties to manipulate the market , jeopardizing investors' rights and interests.

Therefore, MAS has been continuously taking action on the regulatory aspects of digital currency anti-money laundering. In 2017, MAS released the Digital Token Guide, which was updated in 2018. On January 14, 2019, the Singapore Parliament reviewed and approved the Payment Services Bill and was formally legislated.

In 2016, Swiss banks and Swiss branches of Anqin Private Bank Singapore were cancelled commercial banking licenses by MAS due to violations of anti-money laundering regulations. The three bank employees received 15-year, life-long bans from participating in the management of Singapore Capital Services Company. Or engage in related activities. In May 2017, Credit Suisse and UOB were involved in an incident involving the Malaysian company and failed to supervise customer transactions. They repeatedly violated anti-money laundering regulations and were fined 700,000 yuan and 900,000 yuan by the Monetary Authority of Singapore, respectively.

The license issued by MAS is called CMS, which is called "Capital Markets Services Licensee". The enactment of the Payment Services Act again shows Singapore's firm position on the regulation of digital currency business. All digital currency exchanges, wallets and OTC platforms must meet relevant anti-money laundering regulations and apply for corresponding licenses.

The latest "Payment Service Provider License Application Guide" and 4 samples of license application forms published by MAS on its official website clarify the types of licenses issued, license application information, conditions, and procedures.

Three and three types of MAS regulatory licenses

There are currently three types of licenses that can be applied for:

(1) Currency Exchange License (MC) : It is applicable to currency exchange services. The scope of the license is relatively small, and the business involves small business scales and low risks.

(2) "Standard Payment Agency" License (SPI) : Applicable to institutions that conduct account opening services, domestic remittance services, cross-border remittance services, commercial procurement services, electronic payment services, payment-type digital currency services and currency exchange services; / The transfer amount is limited, that is, the annual average monthly business involves an amount of ≤3 million SGD / or the annual average monthly business involves a flow of ≤6 million SGD. SPI's application requirements are relatively low and the degree of supervision is relatively low.

(3) "Large Payment Agency" License (MPI) : Applicable to industries whose business involves more than the amount listed in the "standard payment" license, involving large amounts of money and strict license approval.

The company must obtain the corresponding new license approval before launching new payment services. If the company wants to change the SPI license to the MPI license, it should start the license change within a reasonable time when it is close to the MPI standard, so the MPI is approved Previously, institutions holding SPI licenses should monitor their transaction volumes or the value of issued electronic money to ensure that the threshold remained below the specified threshold.

Requirements for applying for a license

1. Sole proprietorship: The applicant must be a Singapore citizen and must have at least one year of relevant work experience.

2. Partnership or limited liability partnership: Most partners must be Singapore citizens; each partner must have at least one year of relevant experience.

3. A wholly-owned Singapore company: more than 50% of the company's equity should be owned or effectively controlled by Singapore citizens; the company's board of directors should be Singapore citizens; each executive director must have more than one year of relevant work experience or business experience.

4. A foreign bank incorporated in Singapore or a wholly-owned subsidiary of a foreign company mainly engaged in currency exchange: if it is a foreign bank, it must be at the forefront of the country of registration and have a good reputation and track record.

5. Basic capital requirements:

"Standard Payment Agency License (SPI)": S $ 100,000

"Large Payment Agency License (MPI)": S $ 250,000

* Considering its scale and scope of operations and potential gains and losses, applicants must ensure adequate capital buffers beyond this basic capital requirement.

6. Before starting business, applicants for payment agency licenses need to pay a deposit to MAS:

If the average transaction volume of any of the applicant's payment services is less than S $ 6 million per month: payment of a security deposit of S $ 100,000.

Other circumstances: Payment of a security deposit of S $ 200,000.

7. Compliance arrangements

You need to establish an independent compliance department and personnel, or get compliance support from a holding company or affiliate.

V. Application Process

01 Case 1 is for applicants who are " not yet engaged in payment business in Singapore but would like to obtain a payment license ":

Applicants need to prepare the following documents: company registration certificate, financial statements of the company or group in the past three years, organizational chart, business plan, equity chart, relevant compliance documents.

02 Case 2 is for applicants who have obtained a payment license under the framework of the previous payment bill and wish to change and renew the license :

You need to fill in the form and prepare the following materials: the company's or group's financial statements for the past three years, organizational chart, business plan, and relevant compliance documents.

03 Scenario 3: If the applicant has been engaged in related payment services (such as payment-type digital currency services) not covered by the previous payment bill framework in Singapore before January 28, 2020 :

You need to fill in the “Payment Service Provider License Period Exemption Notification Form” and complete the online submission.

summary

 

Currently, MAS has not announced the details of the institutions that have submitted applications. The scope of MAS's payment bill supervision is not limited to those registered in Singapore, but involves all relevant institutions that carry out actual operations in the Singapore market. Therefore, according to relevant media reports, large exchanges such as Huobi and other companies that have operations in Singapore have begun preparing their license applications.

At present, digital currency services are inadequately regulated in many aspects, and many countries around the world have yet to have clear regulatory measures on blockchain and digital currencies. The issuance of the Singapore MAS license fills the gap in Singapore's supervision of the cryptocurrency field. . Under the guidance of the Singapore government's principle of "not seeking zero risk and stifling technological innovation" for fintech, it can be predicted that more and more digital currency businesses will be launched in Singapore in the future. This trend will benefit Singapore and even the entire Further development of the blockchain industry.