Legislative Update: MAS Payment Services Bill introduced in Parliament

Significance: new Payment Services Bill by the Monetary Authority of Singapore (MAS) was introduced in Parliament on 19 November 2018. This new law will replace the Payment Systems (Oversight) Act (Cap. 222A) (“PS(O)A”) and the Money-Changing and Remittance Businesses Act (Cap. 187) (“MCRBA”).

The proposed new law will apply to:-

a) account issuance service;
b) domestic money transfer service;
c) cross border money transfer service;
d) merchant acquisition services;
e) e-money issuance service;
f) digital payment token service (cryptocurrencies or virtual currencies);
g) money-changing service.

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Legislative Update: Market Operators in Singapore – Cryptocurrency and Digital Token Exchanges

Updated: Cryptocurrency and digital token exchanges may be market operators or digital payment token exchange

Cryptocurrency and digital token exchanges (“Token Exchanges”) which allow the trading and exchange of any token which are “capital markets products”, that is securities, shares, bonds, debentures, units in collective investment schemes, regulated under the SFA would likely be deemed to be market operators: see Case Study 6 of the Guide to Digital Token Offerings issued on 14 November 2017, revised on 30 November 2018 (the “DTO Guide”).

Token Exchanges which do not allow trading of any capital markets products regulated under the SFA would not be deemed market operators. However, the Monetary Authority of Singapore (“MAS”) will regulate such exchanges which allow trading of cryptocurrency and digital payment tokens (or virtual currencies) that are not security tokens under a proposed new Payments Services Act (“PSA“): see analysis of the Payment Services Bill here

Operators of Token Exchanges that allow trading of “capital markets products” will need to obtain MAS’s approval, recognition or exemption under the SFA.

Operators of Token Exchanges that allow trading of digital payment tokens that are not security tokens or “capital markets products” will need to apply for a licence from MAS under the PSA. Exchanges licensed under the PSA to perform such activities will be required to comply with AML/CFT requirements, including those relating to identification and verification of customer, ongoing monitoring, screening for ML/TF concerns, suspicious transaction reporting and record keeping. More information on this will emerge subsequently. 

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