Singapore has introduced new payment legislation that, for the first time, provides global cryptocurrency companies with the opportunity to apply for an operating license to conduct their business in the country.
The Payment Services Act, which came into effect today, is the first comprehensive regulatory requirement for businesses engaging in digital payment token transactions such as Bitcoin and Ethereum. In addition to bringing cryptocurrency companies into the regulatory sphere, the law will also grant the Singapore Monetary Authority (MAS) formal regulatory powers to regulate cybersecurity risks and control money laundering and terrorist financing activities.
The move narrowed the gap with Japan. Japan is currently the main cryptocurrency trading center in Asia, and since 2017, 22 exchanges have obtained trading licenses in Japan. Increasing interest from global investors in digital tokens has prompted multiple regulators to review relevant platforms, especially for money laundering and other illegal activities.
Nizam Ismail, founder and CEO of consulting firm Ethikom Consultancy, said the main advantage of this new regulation in Singapore is that it provides clear oversight of “emerging and innovative” types of payment activities such as e-wallets and cryptocurrency transactions Regulations.
Tokyo-based crypto exchange operator Liquid Group Inc. and London-based company Luno, which already operates in Singapore, are among the companies planning to apply for a permit. "We welcome this initiative very much," said Mike Kayamori, CEO of Liquid. The company will apply through its local subsidiary Quoine Pte.
Luno's Singapore general manager Sherry Goh said the bill "provides regulatory certainty for industry participants, but more importantly, it shows consumers a clear concept of a platform they can trust." Luno obtained last year Business Permit in Malaysia.
According to Chainalysis data, 20 of the top 50 crypto exchanges are located in the Asia-Pacific region, accounting for about 40% of Bitcoin transactions in the first half of last year.
Large cryptocurrency exchange Binance has an office in Singapore, which is supported by Vertex Venture. This company is a venture capital arm of Temasek Holdings. Binance spokeswoman Kathy Zhu declined to comment on whether the company would seek a Singapore license.
The Singapore Monetary Authority said in an emailed release on Tuesday that the new law will strengthen consumer protection and boost confidence in the use of electronic payments. Loo Siew Yee, Assistant Managing Director of the HKMA said:
"This activity-based, risk-centric regulatory framework allows us to apply rules appropriately and to maintain a robust business model that is constantly changing."