Singapore’s central bank, the Monetary Authority of Singapore (MAS), has finalized new regulatory framework for payment service providers in Singapore. The new regulation allows payment service providers that are licenced under the regime to support certain cryptocurrencies in their services.
Payment Services Bill (PSB)
As explained by Singapore’s central bank:
The Payment Services Bill will provide a more conducive environment for innovation in payment services, whilst ensuring that risks across the payments value chain are mitigated.
In addition to payment service providers already under the current regulation, it’s been reported that cryptocurrency service providers who were previously outside of regulation can now expect to be licenced under the new Payment Services Bill.
Activities to be regulated by the bill include the issuing of accounts and electronic money, the transfer of money within and out of Singapore, the acquisition of merchants who will use their platform, money changing, and the dealing in and exchange of digital payment tokens such as Bitcoin.
The Payment Services Bill outlays 2 primary regulatory frameworks in which payment service providers must follow — the first being the enabling of MAS to regulate payment systems for financial stability as well as efficiency reasons, the second being that all payment service providers must be licensed.
Furthermore, payment service providers must apply for the proper license most suited to their services. They can either apply for money changer, a standard payment institution, or a major payment institution license.
To apply for a standard payment institution license, the entity must transact over $3 million per month and hold no more than $5 million.
As pointed out by the Straits Times, by requiring payment service providers to be licensed as a money-changer, the MAS will be better able to regulate for money laundering and terrorism financing. As for the other 2 licences for a “standard” or “major” payment institution, a more comprehensive approach to regulating is applied, with major payment institutions receiving the most rigorous regulation.
Payment service providers who utilize digital tokens will have 6 months to comply with the regulations set forth by the the PSB. As for non-crypto payment service providers, they will have 12 months to comply.
Regulation and Institutional Investors
Singapore’s regulatory developments are finalized in a time when talks of institutions coming to crypto are plentiful. The correlation between the two cannot go unnoticed, as institutional investment must have sound regulations in place before delving in.
As stated in their recent report, Big Four auditor KPMG believe that regulatory oversight is essential for big institutions to invest in cryptocurrencies.
Furthermore, in a recent interview, CEO of Binance Changpeng Zhao proclaimed that institutions are coming to crypto: “It’s just a matter of time.”
As Singapore’s regulatory framework for cryptocurrency service providers is finalized, we could potentially see an influx of institutional investment coming from Singapore. However, only time will tell if this development will have a positive impact on the crypto market.
What do you think of Singapore’s take on cryptocurrencies and their regulatory framework for payment service providers? Let us know in the comment section below.
