On 21 November 2017, the Monetary Authority of Singapore (MAS) issued a second consultation paper on its proposed Payment Services Bill (“Bill”) which adopts an activity-based approach in the regulatory framework. Under the Bill, entities that undertake any of the following activities are required to be licensed:
This legal update focuses on the proposed regulation of virtual currency services under the Bill.
The new Payment Services Bill
MAS proposes to group licensees offering retail payment activities into 3 main licence classes, namely:
Money-changing licensees may only provide money-changing services, while licensees from the other two classes may provide any regulated service under the Bill. However, only a major payment institution licensee may carry out payment services above a specified monetary threshold.
Applicants for payment services licences must satisfy stipulated requirements, which include having a permanent place of business in Singapore or a registered office in Singapore. The applicant must appoint at least one executive director who is a Singaporean citizen or Singaporean Permanent Resident. In addition, a licensee must maintain the prescribed minimum paid up capital on an ongoing basis.
Regulation of Virtual Currency Services
The following are some key proposals under the Bill relating to the regulation of virtual currency services:
a) Licensing requirements
Providers of virtual currency services must hold a payment services license.
b) AML/CFT requirements
Virtual currency payment providers will be subject to anti-money laundering and countering the financing of terrorism (“AML/CFT”) requirements, which include identifying and verifying customer and beneficial owner identities, ongoing transaction monitoring, screening customer for money laundering and terrorism financing concerns, suspicious transaction reporting and record keeping. These requirements may be applied in varying degrees of intensity and frequency, depending on the virtual currency payment provider’s customer and transaction risk profiles.
The consultation paper released by the MAS is available here.
This alert is for general information only and is not a substitute for legal advice.