Cryptocurrencies also termed as Digital Payment Tokens (“DPT”) are regulated under the Payment Services Act (“PSA”) in Singapore. Based on the DPT’s characteristics and attributes they could fall outside the ambit of the PSA . Utility tokens are generally not regulated by the MAS as financial products, but intermediaries dealing with such utility tokens may require licensing if such utility tokens constitute digital payment tokens. Further some could fall within the purview of the Securities and Futures Act (“SFA”).
Prior to applying for licenses or conducting any cryptocurrency related activities, entities should obtain a legal opinion on the characteristics of the coins and/or tokens from a Singapore law firm to ascertain the governing piece of legislation.
There are seven payment services defined in the PSA, account issuance service, e-money issuance service, merchant acquisition service, domestic money transfer service, cross-border money transfer service, money changing service and DPT service.
The product could potentially fall under the definition of “e-money” or “DPT service”, in which case the entity would need to obtain a license under the PSA.
The PSA sets out the definition of the term ‘digital payment token’ as any digital representation of value that is expressed as a unit, not denominated in any currency or pegged to any currency, intended to be a medium of exchange accepted by the public as payment and can be transferred, stored or traded electronically.
“E-money” is defined as “any electronically stored monetary value that is denominated in any currency, or pegged by its issuer to any currency, has been paid for in advance to enable the making of payment transactions through the use of a payment account, is accepted by a person other than its issuer and represents a claim on its issuer, but does not include any deposit accepted in Singapore, from any person in Singapore’.
VASP’s and DTP providers who are considering offering their services in Singapore should take into account the above.
NIMBL would be happy to advise you on your licensing requirements in Singapore.