Singapore’s MAS Tightens User Protection Regulations on Crypto Payment Services

The Monetary Authority of Singapore (MAS) has issued additional guidelines for digital asset companies in the country to adhere to in a bid to protect end-user interests for customers of digital payment token (DPT) services.

On Tuesday, April 2, 2024, the financial regulator published a press release informing the public of its recent move to widen the scope of its digital asset regulations to now govern the custody of virtual tokens and more fintech companies as part of its effort to establish an institutional hub for the crypto industry.

The country’s Payment Services Act, the legislation which informs the sector’s services, was amended to include three key activities in the regulator’s purview:

Provision of custodial services for digital payment tokens;
Cross-border fund transfers between nations, even in instances where funds are not received or accepted in Singapore; and
Digital payment token transfers between accounts of digital asset exchanges, even in regions where the service provider does not possess the tokens or funds.

The regulator noted that these amendments would enable it to impose standards concerning anti-money laundering to combat the financing of terrorism, financial stability for digital asset service providers, and user protection. Notably, the announcement follows closely on the heels of MAS’s unveiling of COSMIC, a centralized digital platform aimed at fighting illicit financing and money laundering.

MAS also noted that transitional arrangements will be made for firms currently operating under the Act’s widened scope. The regulator emphasized that these entities must contact MAS within 30 days and reapply for an operational licence if they are still interested in operating in the country while it reviews their regulatory status. The regulator warned that entities that do not fulfil the new requirements must cease operations when the amendments become active.

According to the press release, these updates to the Act will take effect in phases beginning on April 4, 2024.

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