Reed Smith Client Alerts

Key takeaways

  • Monetary Authority of Singapore (MAS) has issued a consultation paper outlining new licensing framework for ‘digital token service providers’ (DTSPs)
  • DTSP framework will supplement existing Singapore regulatory frameworks by expanding the scope of regulation to Singapore corporations and individuals or partnerships with a presence in Singapore that provide ‘digital token’ (DT) services outside Singapore
  • DTSPs will need to seek a licence from the MAS, comply with a range of conduct requirements and maintain substance in Singapore (e.g., in the form of personnel on the ground, a place of business in Singapore and minimum financial resources)
  • Consultation closes on 4 November 2024. MAS will give industry at least four weeks’ notice of DTSP framework commencement, at which point DTSPs will require a licence or exemption to continue operating

Autoren: Hagen Rooke Bryan Tan Jun Qi Chin Nicholas Tok (Resource Law LLC), Eng Han Goh (Resource Law LLC)

MAS consultation

The DTSP framework was first proposed by the MAS in a July 2020 consultation paper, and the foundational provisions for the licensing and regulation of DTSPs were subsequently enshrined in Part 9 of the Financial Services and Markets Act 2022 (FSM Act), which is not yet in effect. On 4 October 2024, the MAS issued a consultation paper setting out the more detailed proposed requirements for DTSPs.

The DTSP framework will supplement Singapore’s existing crypto regulatory framework, the Payment Services Act 2019 (PS Act), which has been in place since 2020. Providers of DT services under the FSM Act should not be confused with providers of ‘digital payment token’ (DPT) services under the PS Act (who are already subject to regulation in Singapore). Additionally, the DTSP framework will supplement the regulatory frameworks under the Securities and Futures Act 2001 (SFA) and the Financial Advisers Act 2001 (FAA). A service provider holding a licence, approval or exemption under the PS Act, SFA or FAA will not additionally require a licence for DT services under the FSM Act to conduct the same activities.

The purpose of the DTSP framework is to fully align the territorial scope of Singapore regulation with the Financial Action Task Force (FATF) guidelines for the regulation of virtual asset service providers. In particular, the current rules do not adequately capture certain businesses whose operations are outside Singapore but have Singapore touchpoints.