October 9, 2024
By Our Correspondent
The Monetary Authority of Singapore (MAS) has released a consultation paper aimed at gathering feedback from the industry regarding proposed regulatory measures for digital token service providers (DTSPs) under the Financial Services and Markets Act (FSM Act).
Enacted by Parliament on April 5, 2022, the FSM Act establishes a legislative framework for the regulation of DTSPs operating both within Singapore and internationally. The primary objective of the Act is to strengthen regulatory oversight of DTSPs to reduce risks associated with digital tokens.
This new framework broadens Singapore’s cryptocurrency regulations to include local corporations, individuals, and partnerships that offer crypto services abroad, thereby addressing a potential oversight in the existing regulatory landscape.
DTSPs will be required to secure a license from the MAS and adhere to various conduct standards, including anti-money laundering (AML) regulations and the necessity of maintaining a significant operational presence in Singapore. The MAS has indicated that licenses for DTSPs will be granted only in exceptional circumstances, highlighting that most operators with connections to Singapore will likely fall under the current cryptocurrency regulatory framework.
The consultation paper outlines several regulatory instruments under the FSM Act, which include FSM regulations, AML/CFT obligations, technology risk management and cyber hygiene guidelines, as well as conduct and disclosure requirements.
The MAS is actively seeking industry engagement to help shape the final regulations. Stakeholders are encouraged to share their insights on various elements of the proposed framework, such as third-party reliance, correspondent account services, and value transfer stipulations.
After the consultation period concludes, the MAS intends to publish the final regulations and guidelines at least four weeks prior to their implementation. Feedback from participants in the financial sector and other interested parties is invited until November 4, 2024, via the provided link.
