Singapore: Payment Services Act to now cover token transfer and custody

Singapore’s financial regulator (the Monetary Authority of Singapore (“MAS”)) has announced amendments to the Payment Services Act (“PS Act”) to expand the scope of payment services and to impose user protection and financial stability-related requirements on digital payment token (“DPT”) service providers.

The amendments take effect in stages today (4 April 2024).

In this brief update, we highlight the main points that organisations should focus on:  

What are the amendments?

The following activities will now be within the purview of the PS Act:

• Provision of custodial services for DPTs;
• Facilitation of the transmission of DPTs between accounts and facilitation of the exchange of DPTs, even where the service provider does not come into possession of the moneys or DPTs; and
• Facilitation of cross-border money transfer between different countries, even where moneys are not accepted or received in Singapore.

On a related note, the amended Payment Services Regulations on safeguarding of assets belonging to customers of DPT service providers will take effect 6 months from today. These include segregating customers’ assets and placing them in a trust account for the benefit of customers, maintaining proper books and records, and ensuring that effective systems and controls are in place to protect the integrity and security of customers’ assets.

Is there a transitional period?

Transitional arrangements will be provided for entities presently conducting the above activities.

Such entities must notify the MAS within 30 days, and submit a licence application within 6 months from today, if they wish to continue the activities on a temporary basis while the MAS reviews their licence applications.

The licence application must be accompanied by an attestation report of the entity’s business activities and compliance with AML/CFT requirements, duly completed by a qualified external auditor, within 9 months from today.

What are the consequences if we do not comply?

Entities which do not fulfil the requirements are required to shut down their activities.

How Clyde & Co can help

Clyde & Co is a leading global law firm with over 60 offices and associated offices worldwide, 490 partners, 2,400 lawyers, 3,200 legal professionals and 5,500 total staff.

The Singapore office of Clyde & Co has extensive experience advising technology companies, such as e-payment providers, cryptocurrency exchanges, token issuers and FinTech companies, on business establishment and licensing, acquisitions and disposals, portfolio transfers, outsourcing arrangements, cross-border business structures and regulatory compliance, in Asia-Pacific.

Should you have any queries on this recent development, our team would be happy to assist. Please do not hesitate to contact the authors of this article.