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Singapore has moved to approve a legislation that will give the MAS (Monetary Authority of Singapore) expanded powers and introduce tighter regulation for the country’s crypto industry.
According to the MAS, the Financial Services and Markets Bill will also require VASP (virtual asset providers) based in Singapore but are also operating overseas to be licensed and subject to AML (anti-money laundering) and CFT (financing of terrorism) requirements.
Digital token service providers created in Singapore without providing any digital token services the country are currently unregulated for AML/CFT.
“These entities may claim to be headquartered here to take advantage of Singapore’s global reputation”, Alvin Tan, minister of state and MAS board member, said during a second reading of the bill on Monday, adding that this creates reputational risks for Singapore.
The bill also gives MAS powers to impose a higher maximum penalty of S$1 million (US$740,000) on financial institutions if they experience cyber attacks or service disruptions as a result of poor technology risk management.
Desmond Yong, chief strategy officer of Singapore-based payments firm Digital Treasures Center, spoke to Blockhead about the new regulations.
“AML/CFT should be the baseline for all crypto companies wanting to operate regardless of jurisdiction as it helps to uplift the whole ecosystem and prevent abuse from the bad actors,” he said.
“For those affected crypto players (i.e. based in Singapore but providing services to clients outside of Singapore and fall outside the scope of existing regulation), they need to either allocate additional resources to meet the requirement or move out of Singapore.”
“With more countries coming up with regulations for crypto players, these companies (without proper AML/CFT) might find themselves without a place to go in the near future,” Yong concluded.
The new laws do not affect DTC as the firm is already regulated under PSA (Payments Services Act) as a digital payment token services provider.
Singapore is seeking to position itself as a global crypto hub, but is also wary of the risk that emerging technologies such as cryptocurrencies can pose. Multiple cryptocurrency exchanges have relocated to Singapore in recent months, but only a handful have succeeded in obtaining a digital payment token (DPT) license from the MAS.
“We don’t need 160 of them to set up shop here”, Ravi Menon, MAS managing director, said in an interview last year. “Half of them can do so, but with very high standards.”
Back in January, MAS barred crypto providers from promoting their services to the public via any means except through they own websites, social media accounts, and/or mobile applications, citing the unsuitability of cryptocurrency trading for the general public.
In recent months, Dubai has emerged as a possible haven for the global crypto industry, with major players such as Crypto.com, FTX, and Binance all setting up shop in the gulf nation.