Evolution of the cryptocurrency landscape in Singapore

21 June 2022 | Applicable law: Singapore

Cryptocurrency is the trending topic of the day, with as many advocates as there are cynics. Both sides have substantial arguments as to the pros and cons of this blockchain backed new age currency. Either way, it is receiving immense attention, for there is no denying that it has an incredible amount of potential to revolutionize the financial industry. 

Nonetheless, as with all things with potential, there are also risks – risks which, if left unchecked, would most certainly yield disastrous results. Cryptocurrencies – owing to the anonymity, speed and cross-border nature of its transactions, carry as much risk as it does potential, and there are ample examples in the market to evidence this.

While the Monetary Authority of Singapore (MAS) is highly supportive of FinTech innovation, it also recognizes the potential for misuse, and has put in place new rules and measures to regulate cryptocurrency related services in Singapore, which we will explore in this article.

Regulations under PSA

Cryptocurrency, or known as digital payment token (DPT) under the Payment Services Act 2019 (PSA), is defined as “any digital representation of value (other than an excluded digital representation of value) that: a) is expressed as a unit; b) is not denominated in any currency, and is not pegged by its issuer to any currency; c) is, or is intended to be, a medium of exchange accepted by the public, or a section of the public, as payment for goods or services or for the discharge of a debt; d) can be transferred, stored or traded electronically; and e) satisfies such other characteristics as MAS may prescribe”.(1)

The service of dealing in, or facilitating the exchange of, DPT is regulated under the PSA. This will include the service of buying or selling DPTs (including issuer buying or selling its own DPT) or providing a platform to allow persons to exchange DPTs. Unless exempted under the PSA, entities that provide such services are required to obtain a standard payment institution license or a major payment institution license depending on the size of the transactions undertaken by them.

To further align with the enhanced Financial Action Task Force Standards relating to virtual assets service providers(2), the PSA has been amended to expand the scope of regulated payment services (in particular DPTs) with the passing of the Payment Services (Amendment) Bill in Parliament in January 2021 (PSA Amendments). Some key changes made by the PSA Amendments include the following:

  • It empowers MAS to regulate DPT service providers that:

a) facilitate the transmission of DPTs;
b) facilitate/broker DPTs transactions (including cases whereby the service providers do not possess the moneys or DPTs involved); or
c) provide custodial services on behalf of customers.

Item a) will capture activities as broad as arranging for the transmission of DPTs from one token address or account to another (whether in Singapore or elsewhere). Item b) will apply to any entity that carries on a business that actively facilitates (or induces) the buying or selling of DPT in exchange for any money or any other DPT. Item c) will capture service providers that provide the service of safeguarding or administration of DPTs on behalf of customers, where the service providers had control over the DPTs.

  • MAS may impose additional measures on DPT service providers to maintain stability in Singapore’s financial system, safeguard the efficacy of the monetary policy, or where it is in the interest of the public to do so.
  • It broadens cross-border transfer service to include facilitating transfers of money in different jurisdictions where money is not received in Singapore.

It is notable that the PSA gives DPT an extensive definition which could potentially cover different forms of cryptocurrencies or other digital assets which were not intended to be used to make payment.

Nonetheless, MAS has from time-to-time issued clarifications on whether a particular service or product constitutes DPT. For instance, if your business involves blockchain mining or software development, MAS clarified that it may not be a licensable payment service under the PSA if it conducts pure technical activities of this type, provided that it does not involve carrying on a business of transmitting or arranging for the transmission of DPTs.(3) MAS also clarified it may be a licensable DPT facilitation service if you provide brokerage or exchange services, or software applications which enable users to find counterparties, and actively match orders for buyers and sellers of the DPTs, without taking possession of the moneys or DPTs.(4)

Furthermore, Singapore regulators monitor closely the use/offer of virtual assets (including DPTs) in the market and have put in place measures and regulations with the primary aim of minimising the risk of DPT service providers being exploited for money laundering purposes. All DPT service providers are subject to anti-money laundering and counter-financing of terrorism (AML/CFT) requirements under the PSA. These include requirements to conduct customer due diligence, monitor transactions, perform screening, report suspicious transactions and keep adequate records. DPT service providers are required to put in place robust controls to detect and deter the flow of illicit funds and adhere to Notice PSN02 on Prevention of Money Laundering and Countering the Financing of Terrorism – Digital Payment Token Service and its guidelines.

New developments

In addition to putting in place robust controls to deter prohibited transactions, DPT service providers’ consumers must also be informed of the risks of trading in DPTs.(5) MAS has stressed that the public should not be encouraged to engage in the trading of DPTs. In order to better protect the interests of the general public, MAS issued guidelines(6) in early 2022 setting out its expectation that DPT service providers should not promote their DPT services to the general public in Singapore. Among others, DPT service providers should not portray the trading of DPTs in a manner that trivialises the high risks of trading in DPTs, and should not promote their DPT services in public areas in Singapore or through any other media directed at the general public. In complying with the changes introduced under these guidelines, DPT service providers who displayed ATMs in public areas across the island had to remove their ATMs overnight.(7)

Furthermore, in response to the developments relating to Russia and Ukraine, MAS has imposed financial measures targeted at designated Russian banks and entities and certain activities in Russia.(8) These measures apply to all financial institutions in Singapore, including DPT service providers. Generally, financial institutions must not, directly or indirectly, establish business relations with or undertake financial transaction for or with, or transfer any assets or resources to, any designated Russian bank or entity. Senior Minister Mr Tharman Shanmugaratnam further clarified during the Parliament sitting on 4 April 2022 that ‘both licensed and exempted DPT service providers must have robust controls to avoid facilitating prohibited transactions. These include procedures to know their customers and the beneficial owners of customers, and to screen these persons and their counterparties’.(9)

On 5 April 2022, the Parliament passed the Financial Markets and Services Bill (“FMSB”), the new omnibus act that consolidates and enhances regulation of DPT service providers in respect of money laundering and terrorist financing risks.(10) Some of the notable regulations/requirements are: FMSB will extend to those who provide DPT services outside Singapore if their businesses are created in or operate from Singapore. Further, FMSB will also give MAS more powers to impose requirements in technology risk management, and that financial institutions could face a fine much more than S$1million if there are multiple breaches of technology risk management requirements. Such situations would include serious cyber-attack or disruption to essential financial services (e.g., ATM network, online trading and digital banking services). MAS may also take action such as requiring financial institutions to set aside additional regulatory capital until it is satisfied that adequate risk control measures have been put in place.

What’s next for DPT?

We can expect more regulations, notices, guidance and/or standards to be introduced to regulate the payment services ecosystem in Singapore, in particular Stablecoins and DPTs. That said, we believe the Singapore government will continue its efforts to encourage and facilitate FinTech development whilst safeguarding market integrity and the interests of consumers and merchants. It is also expected that MAS and the relevant regulators will continue to educate consumers and raise public awareness in respect of the risks of trading in DPTs and/or the impact of exploiting certain payment services offered in the market (including, but not limited to, ‘buy now, pay later’ schemes).

This article has been produced for general informational purposes only. The information contained in this article should not be construed as legal advice and is not intended to be a substitute for legal counsel on any subject matter. No recipient of this article should act or refrain from acting on the basis of any contents in this article without seeking appropriate legal or other professional advice.

This article has been widely republished on Lexology and Conventus Law.

(1) Section 2(1) of PSA.
(2) In the Singapore context, such entities will be termed digital token service providers.
(3) MAS' Response to Feedback Received on Proposed Amendments to The Payment Services Act 2019, available at
(4) Ibid.
(5) PSN08 Notice on Disclosures and Communications, available at
(6) PS-G02: Guidelines on Provision of Digital Payment Token Services to The Public issued by MAS on 17 January 2022, available at which took effect immediately on 17 January 2022.
(8) MAS Notice SNR-N01: 'Financial Measures in relation to Russia dated 14 March 2022 issued by MAS, available at "
(9) Reply to Parliamentary Question on Cryptocurrencies and DeFi (Notice paper 1076 of 2022), available at

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.


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