Singapore AML Framework Can Attract Crypto Businesses, Not Chase It Away

As crypto continues its foray into the mainstream financial world, more countries are recognizing digital assets legally. Singapore is the latest to join the party. On Jan. 28, the Monetary Authority of Singapore’s (MAS) Payment Services Act went into effect, setting up a framework for the regulation of payment-related activities in the country. 

Given that the bill requires that all crypto businesses get registered and licensed (and partly resembles the nature of 5 AMDL measures recently enacted in Europe), now seems like the time to have a closer look at Singapore’s regulatory model for crypto and to see what it might mean for the industry.

MAS have been planning to change the regulations since at least 2016. In August of that year, the financial regulator published a paper suggesting modernizing the regulatory framework, making it flexible enough to cater to disruptive technologies emerging in the payments and remittance fields. The move followed MAS Managing Director Ravi Menon’s announcement of the agency’s plans to push for “an Electronic Payments Society.”

Just one year later in November 2017, MAS released another paper on the proposed Payment Services Act. It specifically outlined that it was working toward regulating cross-border money transfers, e-money issuance and digital currency services, among other things. The agency stressed that it aimed to improve user and merchant protection, create space for the growth of the fintech-friendly ecosystem, and bolster cybersecurity.

MAS explicitly stated in the document that digital currency intermediaries pose money laundering and terrorist financing risks, giving a glimpse into what kind of cryptocurrency regulation the upcoming bill might entail.

Another year went by, and, in November 2018, MAS published the finalized edition of the Payments Services Act (PSA) and submitted it before parliament weeks after Menon had said he intends to “bring together” banks and crypto businesses. The document was signed in January 2019, putting Singapore in line with Japan, Malta, Switzerland and a few other countries that have enacted real, practical regulations on cryptocurrency.

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