New Singapore law has come into force today. It requires all crypto firms and businesses operating in the country to get registered and licensed.

Singapore Payment Service Act was first passed in early January 2020 and is enacted now. The Monetary Authority of Singapore (MAS) announces the news on Tuesday. According to the act, it will give the regulator formal supervisory authority over payments firms, including cryptocurrency.

The act also covers ‘digital payment token services‘ – effectively all crypto firms and exchanges in the country. It means they will have to comply with anti-money laundering and counter financing of terrorism requirements. However, MAS believes that cryptocurrencies carry significant money laundering risks due to their anonymous and borderless nature of transactions. Therefore, all crypto businesses need to hold a license to operate in the country.

Three Classes of Licenses under New Singapore Law for Crypto Firms

The act, however, doesn’t impose uniform licensing requirements. It adopts an activity-based licensing framework for different kinds of activities they undertake and the risks they pose. There are three classes of licenses – a money-changing license, a standard payment institution, and a major payment institution, per the act. Each service provider needs to hold only one of three licenses.

The activity-based and risk-focused regulatory structure allows rules to apply proportionately and become robust to changing business models. The PS Act will facilitate growth and innovation while mitigating risk and fostering confidence in the payments landscape. Loo Siew Yee, Assistant Managing Director at MAS says.

Applicants in Line

Singapore-headquartered crypto exchange Zipmex is one of the firms planning to apply for the licenses. Regulation brings legitimacy and credibility to digital assets. CEO of Zipmex, Marcus Lim told in his exclusive interview session with the media people.

Japan-based crypto exchange Liquid and UK-based bitcoin wallet provider Luno are also reportedly planning to apply for the licenses. Luno is already operating in Singapore.

Singapore now has become one of the few regions to have regulatory clarity for crypto businesses. Japan has been regulating the crypto sector since 2017 through its Payment Services Act. Earlier this month, the EU region also brought its Fifth Anti-Money Laundering Directive (AMLD5) into force. However, the directive has led some crypto business closures and some have moved their operations out of the EU.

As for Singapore, MAS believes its new law will strengthen consumer protection and promote confidence in the use of electronic payments.