A view of Singapore's skyline March 2, 2016.  REUTERS/Edgar Su
Singapore's new regulations require cryptocurrency-related firms to apply for operating licenses such as a money-changing license, a standard payment institution license and a major payment institution license. Photo: Reuters

Singapore’s new Payment Services Act will regulate cryptocurrency payments and trading enterprises under some aspects of the regulatory regime that currently governs traditional payment services and require them to hold a license, Cointelegraph reported.

Crypto payment services must also comply with the Financial Advisers Act, Insurance Act, Securities and Futures Act and the Trust Companies Act.

The new rules place crypto services under the oversight of the Monetary Authority of Singapore. The regulator announced in a press release that the new framework is expected to “enhance the regulatory framework for payment services in Singapore, strengthen consumer protection and promote confidence in the use of e-payments.”

The regulator’s assistant managing director Loo Siew Yee said: “The Payment Services Act provides a forward-looking and flexible regulatory framework for the payments industry. The activity-based and risk-focused regulatory structure allows rules to be applied proportionately and to be robust to changing business models. The PS Act will facilitate growth and innovation while mitigating risk and fostering confidence in our payments landscape.”

Licensing requirements

The new regulations require cryptocurrency-related firms to apply for operating licenses such as a money-changing license, a standard payment institution license and a major payment institution license.

Japanese cryptocurrency exchange Liquid and its London-based competitor Luno reportedly plan to apply. Liquid CEO Mike Kayamori said, “We welcome the act with open arms.”

As the cryptocurrency space becomes increasingly regulated, many jurisdictions are setting licensing requirements for cryptocurrency businesses. Particularly famous is the case of the stringent BitLicense introduced in the state of New York, which the regulator amended for the first time in nearly five years in December 2019.

Malta introduced licensing requirements for cryptocurrency businesses in July 2018 and received queries from 21 cryptocurrency exchanges seeking authorization to operate in the country. Japanese cryptocurrency exchanges are required to register with the Financial Services Agency since the introduction of that country’s Payment Services Act in April 2017.

Meanwhile, the National Institute for Smart Governance (NISG) in India has published a report recommending that laws governing blockchain should be based on what the technology does, and not the technology itself, according to a report by PYMNTS.com citing The Economic Times.

The National e-Governance Division (NeGD), under the Ministry of Electronics and Information Technology (MeitY), had asked NISG to look into the issue.

The government’s policy and its regulations should be well known before enforcement happens, the policy said.

“Public statements, whether through the press or formal speeches, are helpful but are not official statements of application by the agency. If an agency intends to enforce its laws in new and innovative ways, it must first notify industry stakeholders of its intent to do so and the way in which existing law applies,” it said.

Tanvi Ratna, CEO of Policy 4.0, said that national policy might not be enough in terms of crypto regulation.

“We have seen with all regulatory evolution with the internet era as well that states, if given the space to innovate and compete for talent and growth, can often devise very different approaches. This is definitely the case in the US where states like California, Delaware and New York have usually been well ahead of the federal government and it is also the case in India where states like Karnataka, Andhra, Telangana have often pioneered policy models that get adopted at national levels,” Ratna said.

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