Singapore is stepping up its efforts to regulate the national digital currency industry, this time targeting companies based in the country but offering their services outside the city-state.
Last week, lawmakers in Singapore approved the Financial Services and Markets Bill 2022, which further expands the jurisdiction of the Monetary Authority of Singapore (MAS), the country’s de facto central bank and financial regulator. digital currency. The law covers Virtual Asset Service Providers (VASPs) who trade digital currencies, exchanges, and companies that offer financial advice on the sale of such currencies and tokens.
Under the previous regulatory regime, MAS only had authority over VASPs, which were based in the country and offered their services locally. This led to some regulatory loopholes where a company could claim to be regulated by the MAS, which is a globally reputable watchdog, but not be directly supervised by the regulator.
Alvin Tan, a MAS board member who spoke on behalf of Chief Minister Tharman Shanmugaratnam, said the regulator was concerned about the reputational risk the loophole posed.
“Digital token service providers could easily structure their businesses to evade regulation in any jurisdiction, as they primarily operate online. We may be exposed to reputational risks brought by Singapore-based DT service providers that provide services related to virtual assets such as Bitcoin outside of Singapore,” Tan said.
The new law has been welcomed by some who believe it will boost the reputation of the industry and further enhance investor protection. Legitimate companies operating within the bounds of the law have nothing to fear, say the law’s supporters.
One of them is Anndy Lian, president of the Dutch stock exchange BigONE, who considers the new regulations reasonable.
“If you walk hard enough on the ground, you will see many bad actors and dodgy crypto companies using Singapore as their base of operations. We need to regulate things properly so that bad actors don’t affect the image of this industry,” Lian said, speaking to Nikkei Asia.
There are others who do not support the new law, which they say is just another burden imposed by regulators on a fledgling industry that could prove fatal to its growth.
“Sad, disappointed, we took 10 steps back. So MAS assumes that the license is like gold, that everyone will want to get it? A member of a digital currency group in the city-state said.
There are also concerns related to the processing of license applications by the MAS. As CoinGeek reported in December, MAS received around 180 license applications from VASPs. Of these, 103 were rejected or the applicants withdrew them after realizing they did not meet the standards. At the time, only three companies had obtained operating licenses, and 70 applications were pending.
This long queue of applications was only for local companies targeting the Singaporean market. VASPS will take longer to get licensed in the city-state with the new law. This will force some companies to leave Singapore or dig deeper into their pockets to pass the scrutiny.
“For businesses that are unable to meet AML/CFT requirements, they will have to relocate to other countries. But with more governments regulating cryptocurrency in different jurisdictions, these companies will soon struggle to operate,” commented Desmond Yong, chief strategy officer at the Digital Treasures Center.
This new MAS crackdown comes on top of others, such as a ban on digital currency advertisements in public places, which began in January, and the closure of digital currency ATMs.
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