Singapore’s Central Bank, the Monetary Authority of Singapore (MAS), has announced updates to the Payment Services Act (PS Act) that will bring a broader range of digital payment token (DPT) services under regulatory oversight.
Set to commence in phases from April 4, these amendments aim to enhance the regulatory framework for DPT service providers, encompassing activities such as custodial services, token transfers, and cross-border money transfer facilitation.
Enhanced Regulatory Scope
The expanded scope of the PS Act now includes the provision of custodial services for digital payment tokens and the facilitation of token exchanges and transfers. Moreover, it extends to services facilitating cross-border money transfers. This extension applies even when the service provider does not physically handle the funds or when transactions occur outside Singapore’s borders.
The Monetary Authority of Singapore (MAS) today introduced amendments to the Payment Services Act (PS Act) and its subsidiary legislation to expand the scope of payment services regulated by MAS, and to impose user protection and financial stability-related requirements on…
— Wu Blockchain (@WuBlockchain) April 2, 2024
Focus on Compliance and User Protection
With the introduction of these amendments, MAS aims to fortify the financial ecosystem against risks related to money laundering and terrorism financing. The regulatory body will also focus on ensuring user protection and maintaining financial stability within the DPT sector.
Entities operating within this scope are required to adhere to the new regulations, including applying for a license within a stipulated six-month period following the implementation date.
Safeguarding Customer Assets
An integral part of the amendments is the emphasis on protecting customer assets. Provisions have been made to ensure that DPT service providers segregate customer assets and manage them through trust accounts.
Additionally, these entities must maintain accurate books and records and implement robust security measures to protect customer assets. These specific amendments related to safeguarding customer assets will take effect six months after the initial implementation date.
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Compliance and Licensing
The MAS has laid out clear guidelines for entities affected by the expanded regulatory scope. These entities are urged to notify MAS within 30 days from the enactment date and proceed to apply for the necessary licenses within six months.
Non-compliance will necessitate the cessation of relevant activities, underscoring the regulator’s commitment to upholding stringent standards within the financial sector.
This update reflects Singapore’s proactive stance in adapting its legislative framework to the evolving landscape of digital finance. By extending the PS Act’s coverage to include a wider array of DPT services, MAS aims to promote a secure, stable, and compliant financial environment. This initiative reinforces Singapore’s position as a leading financial hub with a robust regulatory framework.
