Expansion of Singapore’s Payment Services Act to Include Token Custody and Transfers

Singapore has announced amendments to its Payment Services Act (PS Act) aimed at broadening the regulatory coverage over digital payment token (DPT) service providers. The Monetary Authority of Singapore (MAS) revealed plans to roll out these changes in phases, commencing on April 4, with transitional measures in place for affected entities.

Under the revised PS Act, activities such as providing custodial services for DPTs, facilitating token transfers and exchanges, as well as enabling cross-border money transfers, will fall within regulatory purview. Notably, the scope encompasses scenarios where service providers do not physically handle funds or where transactions occur outside Singapore’s borders.

MAS emphasized its intention to impose additional requirements on DPT service providers, particularly concerning anti-money laundering, counter-terrorism financing measures, user protection, and financial stability. These updates, slated for implementation starting April 4, will unfold gradually, with transitional arrangements provided for affected entities.

Affected entities are urged to notify MAS within 30 days and seek licensing within six months of the initial implementation date to continue operations during the review process. Noncompliant entities face closure once the amendments take effect.

Furthermore, MAS will introduce amendments aimed at safeguarding customer assets held by payment token service providers, including measures such as segregating customer assets in trust accounts, maintaining proper records, and ensuring security protections.

The enhanced user asset protection measures are set to be enforced six months following the initial implementation date. A surge in crypto companies obtaining licenses to operate in Singapore has been observed, with entities like Crypto.com, Coinbase, and Ripple securing full payment institution licenses.

Crypto.com obtained its Major Payment Institution (MPI) license in June 2023, while Ripple and Coinbase received formal approvals on Oct. 4 and Oct. 2, 2023, respectively, after meeting regulatory requirements.