According to Statista statistics, by the end of 2022, the rate of crypto ownership in Singapore stood at 19%, about 4% more than the global crypto ownership rate, currently at 15%. With crypto regulation Singapore becoming more defined, the country has seen increasing participation in digital assets. Singapore regulation leads the Asian region in the adoption of crypto assets. Bitcoin and Ethereum stand among the top most adopted coins in the area, largely driven by favorable Singapore crypto laws.
With the country standing tall among the wealthiest countries in the world, Singapore is already shaping up as an international crypto hub. Most crypto owners in Singapore are between 18 and 34 years old.
Crypto in Singapore: The Background
According to GFCO rankings, as of 2024, Singapore was among the top global financial hubs, along with London, Hong Kong, New York City, and San Francisco.
So, what makes Singapore a top center for finance and business? It’s the low taxes and the region’s pro-business stance.
As Singapore is already a vast center for cryptocurrency, it is focused on creating an excellent legal framework for these digital assets.
One thing to make clear is that Bitcoin and cryptos are not considered legal tenders in Singapore. The only legal tender is the Singapore Dollar, which the Monetary Authority of Singapore issues. However, crypto holders can use these assets as alternative payment options.
The country has taken a balanced approach to managing and regulating crypto assets. Its primary goal is the creation of an environment for securing digital assets.
This guide aims to explore the realm of crypto regulations in Singapore. It answers questions like:
- Who regulates crypto in Singapore?
- What is the regulatory framework?
Who Regulates Crypto Assets in Singapore?
Like in many other countries, the duty of regulating financial products, technologies, and activities is distributed to several government watchdogs. So, who is mandated to regulate crypto assets within the Singaporean bounds?
The Monetary Authority of Singapore
The Monetary Authority of Singapore, mainly known as the MAS, is at the heart of financial regulations within Singaporean bounds. Established in 1971, the MAS has functioned as the central bank of Singapore.
Over the recent days, the MAS has played an additional role in regulating financial technologies in the form of virtual currencies like Bitcoin.
The MAS’s crypto-related regulations fall under the Payment Services Act (PSA) 2019, which is one of the core Singapore crypto laws. The framework deals with what are commonly called Digital Payment Token (DPT) businesses.
The mandate of the MAS includes implementing AML and CFT regulations while issuing licenses to DPT service providers, thus enabling the operation of Singapore regulated crypto exchange platforms.
The first real interaction between the MAS and crypto dates back to 2017, when the watchdog officially announced its regulatory mandate over digital assets. However, the release of the PSA in 2019 gave the MAS the mandate to regulate and issue the licenses needed for exchanges. The official framework took effect in 2020.
The regulations regarding exchange registration and adherence to CFT/AML requirements were actually set in 2019.
In July 2023, Singapore’s MAS officially issued an investor protection measure guide to be followed by all DPT service providers. In August of the same year, the MAS released its final stablecoin regulatory guide focused on assets pegged to the Singaporean dollar.
Securities and Futures Commission (SFC)
Another body playing a pivotal role in managing crypto exchanges and trading platforms in Singapore is the SFC. Its most essential role is dealing with tokens that fall under the securities category.
So, how does the SFC determine tokens to list as securities?
It is simple: by looking at its characteristics and resemblance to stocks or bonds. If a crypto asset has such attributes, it will immediately fall under the umbrella of the SFC. In essence, not all crypto assets are securities in Singapore.
The Police Force
The primary role of the Singapore Police Force in crypto asset regulation is enforcing the laws set to regulate the digital realm. Through a serious collaboration with the MAS and SFC, the police force can curb crypto crimes in the country.
What are DPTs?
As already established, crypto-related services within Singapore fall under one umbrella term: Digital Payment Tokens. Which services are included under this term?
Foremost, any services fashioned to aid in exchanging digital payment tokens are DPTs. This includes every crypto exchange.
Secondly, any services designed to aid the buying or selling of DPTs also fall under the umbrella of DPTs.
However, there is a 2021 Amendment Act which aims to redefine DPTs to include:
- Transferring DPTs
- Providing custodian wallets
- Brokerage of DPT transactions.
The watchdogs in the country are still evaluating the proposal before it can take effect.
What is the Regulatory Framework in Singapore?
But what regulatory framework was designed to focus on regulating digital assets in Singapore?
A large part of crypto regulation in Singapore primarily revolves around the Payment Services Act (PSA). So, what are the components of the Act, and how does it directly impact the regulation of crypto assets?
Designed in 2019, the PSA clarifies the legal status of digital assets, such as digital payment tokens, in Singapore and establishes a protocol for exchanging them.
The PSA Act majors on oversight and compliance requirements for anyone under the DPT definition.
Among the compliance demands associated with the PSA include;
- Entities falling under the DPT umbrella must all install robust mechanisms that spot and make reports for suspicious activities. The Suspicious activities reports must always be sent to the MAS.
- All entities are also required to keep in-depth details of their users, which will help in AML and CFT-related inspections.
- All such entities must consistently monitor transactions to spot potential illegal activities that can be categorized as terrorist financing or money laundering.
- DPTS must regularly screen any users under any sanction lists and even politically exposed persons.
- All such companies must conduct KYC scans to know and verify users.
It’s also important to note that the PSA has comprehensive coverage, including companies issuing payment accounts, local and international money transfer service providers, e-money issuers, digital payment token services, and merchant acquisition.
What About the Taxation of Crypto in Singapore?
The country has an adequately established framework focusing on the general taxation of crypto assets within its bounds. The government has an established body called the Revenue Authority of Singapore, designed to deal with all matters of crypto taxation.
In Singapore, the taxation of crypto assets primarily depends on the activity in question. Foremost, those purchasing digital assets for holding do not need to pay capital gain taxes.
Secondly, profits derived from crypto trading are all subject to income tax. Any profits made by professional crypto traders fall under the regular income taxation systems. Moreover, earning crypto in exchange for services falls under income tax of 17%.
You can read more about Singapore’s crypto taxation framework in our guide here.
Crypto Travel Rule
Written under their primary requirements, DPTs must adhere to guidelines associated with crypto traveling. This rule, which has been in effect since January 2020, requires DPTs to collect and submit the sender’s and recipient’s personal client information and share it.
The requirement applies when the clients are sending or receiving DPTs. However, this does not include transfers between the payment service provider and other financial institutions.
Interestingly, the type of information VASPs, or DPTs, must provide depends on the transactional amounts. For any amounts less than SGD 1500, DPTs will share the originator’s and beneficiary’s account numbers, plus the beneficiary’s name.
For any amounts exceeding SGD 1500, please provide additional information, including the sender’s residential address, registered business address, and identification numbers.
Limitations on Cryptocurrency Service Providers
But what limitations have the MAS set for VASPs in Singapore? Not all DPTs must offer retail customers staking and lending services. This is to shield the investors from speculative practices.
While many may feel that the limitations are too stringent and could hinder innovation, The most fundamental idea of setting the limitations is ensuring all consumers are well protected.
What Are The AML Requirements in Singapore?
They include:
- KYC
- Due diligence on high-risk customers
- Transaction monitoring
- Suspicious transaction reporting
- Recordkeeping – DPTs must retain records for five years
Final Word
This guide has looked into Singaporean crypto regulations as the country continues positioning itself as a hub for the crypto realm. The MAS primarily regulates digital assets in Singapore, strictly adhering to the PSA Act. Adhering to the guidelines highlighted above can make a crypto enthusiast’s life very easy in Singapore.
