CNA Explains: Singapore’s tightened crypto licensing rules – ‘closing the door’ or ‘raising the bar’?

CNA Explains: Singapore’s tightened crypto licensing rules – ‘closing the door’ or ‘raising the bar’?

SINGAPORE: The Monetary Authority of Singapore (MAS) has moved to tighten its regulation of unlicensed cryptocurrency firms operating in the country.

Digital token service providers based in Singapore that only serve overseas markets will need to be licensed by Jun 30 – or they’ll have to suspend or cease their unregulated activities here.

Why is MAS doing this?

Experts told CNA the authority was closing a loophole in the industry.

“It’s a step towards consistency,” said intergovernmental blockchain advisor Anndy Lian, adding that ensuring digital token service providers meet the same standards could bolster trust.

Prior to the regulation, providers targeting overseas markets could sidestep licensing requirements and exploit “lighter oversight” while operating from Singapore, he noted.

“This move levels the playing field and likely reflects pressure to align with global anti-money laundering efforts,” said Mr Lian.

Mr Adrian Ang, a partner at Allen & Gledhill’s financial services department, added that it was necessary to support standards set by the global money laundering and terrorist financing watchdog, the Financial Action Task Force.

“Without regulation, the anonymity, speed and cross-border nature of their activities make this sector highly vulnerable to criminal abuse,” he said.

How will firms be affected?

As of Jun 19, MAS has granted digital payment token licences to 33 institutions, including major players like Coinbase and OKX.

While unlicensed digital payment token services can still apply for a local license, MAS has said that it has “set the bar high” and will “generally not issue” one.

Bitget and Bybit are among the top ten exchange operators by volume that do not have a Singapore licence.

A Bloomberg report said Bitget will relocate staff to jurisdictions such as Dubai and Hong Kong, and that Bybit has plans to follow suit.

But experts pointed out that it is the smaller firms that will feel the heat.

While larger firms have in-house legal and compliance departments and experience in dealing with licensing frameworks, smaller and mid-sized players face an “uphill task,” said Mr Mike Chiam, a fintech lawyer at Foxwood LLC.

“Many of them relied on operating from Singapore under a ‘non-retail, overseas-only’ assumption. That assumption no longer holds,” he said.

For these firms – which include unlicensed crypto exchanges, over-the-counter brokers and decentralised finance projects targeting overseas markets – compliance costs, legal restructuring or a complete shutdown are on the table, he added.

Mr Lian, who knows of many small firms trying to shift out of Singapore since early June, agreed that added compliance costs and processes weigh heavily on these.

“I’ve seen startups struggle with similar red tape elsewhere, and it risks pushing innovation to less regulated regions if not handled carefully,” he said.

What about employees?

Mr Chiam said a common question he’s had to deal with relates to whether employees whose job scope involves dealing with digital tokens must relocate.

Based on his law firm’s understanding from employees’ enquiries, it has found that such workers are generally not affected by MAS’ stricter rules, he said.

Practically speaking, employees working for digital token firms do not have to relocate – or at least, that is not the legislative intention, Mr Chiam added.

“On a positive note, employees appear to be interested in knowing how to better comply with regulations and keep abreast of such updates – overall a heightened awareness of the regulatory stance,” he said.

An employee from MEXC, who requested anonymity, observed that other centralised exchanges have introduced additional know your customer (KYC) checks and anti-money laundering (AML) frameworks.

These policies verify customers’ identities, to prevent illicit activity and to comply with global regulations.

Although MEXC does not have a local licence, the employee said his colleagues in Singapore have not been significantly affected.

“There are some observed changes within the compliance and legal teams, but for the most part, it is still business as usual,” he said.

An employee from Bitget, who also requested anonymity, claimed that about ten members of the customer service team were laid off earlier in June.

CNA has reached out to MEXC and Bitget for comment, as well as other firms listed in Singapore but not licensed by MAS.

What does it mean for the industry here?

Ms Angela Ang, who heads Asia Pacific’s policy and strategic partnerships at blockchain intelligence company TRM Labs, said that while Singapore’s approach to crypto may not resonate with everyone, it has been “very consistent”.

“Firms that are not operating this specific kind of business model should not be unduly alarmed. Crypto businesses can still obtain licences here if they are prepared to have a substantive presence, including servicing Singapore customers,” said Ms Ang.

She added that the industry has had “significant runway” to make preparations since the Financial Services and Markets Act was passed in April 2022.

In a media release on Jun 6, MAS also said its position has been “consistently communicated” for a few years since its first response to public consultation issued in February 2022.

It added that based on available information, it was aware of a “very small number” of providers affected.

Allen & Gledhill’s Mr Ang agreed that most crypto firms here should have already undertaken licensing considerations prior to commencing their business, as licensing requirements have been “in force for many years.”

Ultimately, the move should not be misread as Singapore turning hostile to digital assets, Mr Chiam said.

“Instead, the law is making it clear: If your fintech wants to use Singapore’s framework and reputation, you must meet Singapore’s standards,” he said.

“In that sense, Singapore isn’t closing the door – it’s raising the bar.”

 

Source: https://www.channelnewsasia.com/singapore/crypto-licensing-mas-cna-explains-5186446

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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Closing Speech by Anndy Lian: Looking Ahead 2030

Closing Speech by Anndy Lian: Looking Ahead 2030

Fast forward to the year 2030, and we find ourselves in a world dramatically altered over the past decade, especially in finance. What was once a niche and speculative asset class, cryptocurrencies have now transitioned into the mainstream, embraced by millions across the globe. What factors have propelled this astonishing growth and widespread adoption of crypto, and what challenges and opportunities lie ahead for the crypto industry and its users?

The Swift Expansion of Cryptocurrencies

At the core of the crypto revolution is the innovation and evolution of blockchain technology. Blockchain, a distributed ledger system, records transactions in a secure, transparent, and immutable manner. It facilitates peer-to-peer transactions without intermediaries, reducing costs, minimizing friction, and enhancing efficiency and trust.

Blockchain’s transformative power has paved the way for the emergence of various crypto assets, including Bitcoin, Ethereum, stablecoins, utility tokens, security tokens, non-fungible tokens (NFTs), and more. These digital assets serve diverse purposes, ranging from acting as a store of value and medium of exchange to representing real-world assets digitally, offering access to decentralized applications (DApps), and enabling the ownership of digital collectibles.

A study by Grand View Research, Inc. forecasts the global cryptocurrency market to reach USD 11.71 billion by 2030, expanding at a compound annual growth rate (CAGR) of 7.1% from 2021 to 2030. This growth is attributed to the surging demand for crypto assets among both retail and institutional investors, the increasing integration of blockchain technology in various sectors, and the favorable regulatory climate in some countries.

Rising Popularity and Mainstream Acceptance

Another driving force behind crypto adoption is the growing awareness and education among the general public. More individuals are becoming acquainted with the benefits and potential of cryptocurrencies, such as financial inclusion, empowerment, privacy, and sovereignty. The availability and accessibility of various platforms and services, including exchanges, wallets, payment processors, lending platforms, and more, further facilitate this adoption.

A report on Github estimates that the number of crypto users will surpass one billion by 2030, based on a historical growth rate of 63.2% per year. The report identifies key drivers of crypto adoption, including the expansion of Bitcoin and Ethereum, the advent of DeFi and NFTs, the introduction of institutional products and services, and endorsements from celebrities and influencers.

Challenges and Opportunities

Despite the remarkable progress and potential of crypto, several challenges and uncertainties demand attention:

– Regulation and Compliance
– Security and Scalability
– Education and Adoption

On the flip side, numerous opportunities await exploration within the crypto space:

– Innovation and Development
– Inclusion and Empowerment
– Transformation and Disruption

Conclusion

Crypto transcends being merely a technology, currency, or asset—it represents a movement, a culture, and a vision. It is a movement that strives to build a more open, fair, and democratic world. It is a culture that values innovation, collaboration, and diversity. It is a vision that foresees a future where everyone can participate, contribute, and reap the benefits of the digital economy.

Looking ahead to 2030, we can anticipate the continued growth, evolution, and maturation of crypto, with new challenges and opportunities on the horizon. Crypto’s impact extends beyond being the future of money; it encompasses the future of the web and, indeed, the future of the world.

The BCH Meet up was held in South Korea on 28 October 2023. The closing speech is made by Anndy Lian. He is an all-rounded business strategist in Asia. He has provided advisory across a variety of industries for local, international, public listed companies and governments.

The full write-up will be found at https://anndy.com.

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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