Digital Payment Token Services Licence Guide in Singapore

Last updated on February 28, 2022

woman holding a big golden bitcoin and pointing to mobile crypto wallet

Financial technology (“fintech”) has opened up many opportunities for financial entrepreneurship. In Singapore, more firms are looking to provide services for the buying or selling of digital payment tokens (e.g. cryptocurrency), or to provide a platform for the exchanging of such digital payment tokens.

As a result, to accommodate and regulate such payment services transactions, the Monetary Authority of Singapore (MAS) has enacted the Payment Services Act (PSA), which requires any business that intends to provide digital payment token services to first acquire the necessary licences.

If you are a business owner and are considering implementing digital payment token services, this article is for you. We will cover:

What is a Digital Payment Token?

A digital payment token is any cryptographically-secured digital representation of value that is used or intended to be used as a medium of exchange, i.e. cryptocurrency. Examples of digital payment tokens are Bitcoin, Ether, Litecoin and Monero.

As mentioned above, digital payment token services refer to services that aid in the buying or selling of digital payment tokens. Such services may also act as a platform to facilitate digital exchanges.

What Licence Do You Need to Provide Digital Payment Token Services in Singapore?     

The first thing you should do, when establishing your business as a digital payment token service provider in Singapore, is to check if the services you intend to provide are regulated under the PSA.

If the services you plan to offer are not one of the 7 payment services listed under the PSA, then you will not need to obtain any of the licences below. However, if you will be providing digital payment token services, which do fall under the MAS’ list, then you need to obtain one of the following two main classes of licences:

  1. Standard payment institution licence
  2. Major payment institution licence

Standard payment institution licence

If your business will be conducting digital payment token services below specified thresholds, you should apply for a standard payment institution licence.

In this case, the specified threshold refers to accepting, processing, or executing digital payment token transactions of a monthly average of up to S$3 million in a calendar year.

There is also a base capital requirement of S$100,000.

Major payment institution licence

If you intend for your business to provide digital payment token services without any limits on transaction volume or float, you should apply for a major payment institution licence.

This means that you will need a major payment institution licence if the average total value of all digital payment token transactions by your company exceeds a monthly threshold of S$3 million for your digital payment token service over a calendar year.

There is also a base capital requirement of S$250,000.

How Can You Apply for a Licence to Provide Digital Payment Services?

Both the standard payment institution licence and major payment institution licence are collectively known as payment services licences, and entail several application requirements. Considering that the PSA is meant to help safeguard payment services transactions, the process to apply for a licence to provide digital payment services can be a lengthy and onerous one.

Basic requirements when applying for a payment services licence

When applying for either licence, it is important to note that the applicant must:

  • Be a company (incorporated in Singapore or overseas);
  • If you have not incorporated your company, you may start by logging into the BizFile+ website to do so, or by engaging the services of a registered filing agent. You will need to choose a company name and address, and have a company constitution prepared. To learn more about registering a company in Singapore, you may refer to our other article.
  • Alternatively, if you have an established foreign company, there are several routes you may consider to help you set up your foreign company in Singapore. These routes include:
    • Setting up a Singapore branch office;
    • Setting up a Singapore subsidiary;
    • Setting up a representative office; or
    • Redomiciliation.
  • Have a permanent place of business in Singapore or a registered office in Singapore; and
  • Have at least 1 executive director who is a Singapore citizen or Permanent Resident; or
  • Have at least 1 non-executive director who is a Singapore Citizen or Singapore Permanent Resident and at least 1 executive director who is a Singapore Employment Pass Holder.

The MAS is particularly cautious when it comes to assessing a company’s application for a payment service licence, and may consider the following factors:

  • Fitness and propriety of the controllers and directors
  • Governance structure
  • Qualifications and experience, particularly in operating a payment services business and compliance with regulatory requirements
  • Financial condition and track record; and
  • Whether the public interest will be served by granting the applicant a licence.

After you have determined that you meet the admission criteria for the appropriate licence, you may apply for a licence by completing and submitting Form 1.

Standard Payment Institution Major Payment Institution
Documents Required
  • Application form
  • Business profile
  • Financial statements
  • Anti-Money Laundering (AML) compliance programme
  • Business plan, etc.

*Refer to Page 2 of Form 1

Application Fee S$1,000 S$1,500
Licence Fee S$5,000 S$10,000

What are Some Regulations and Guidelines that You Should be Aware of When You have Obtained Your Digital Payment Token Services Licence?

Upon being granted a licence, your company will have to satisfy a list of ongoing requirements to retain the licence. These include:

Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) requirements

Your company must comply with the AML/CFT requirements set out by the MAS, in the Notices on Prevention of Money Laundering and Countering the Financing of Terrorism (PSN01 and/or PSN02) and Notice on Reporting of Suspicious Activities & Incidents of Fraud (PSN03).

Periodic returns

In accordance with the requirements set out in the Notice on Submission of Regulatory Returns (PSN04), your company must submit periodic returns pertaining to its payment service activities.

Cyber hygiene

Proper safeguards to protect customer information must be implemented based on the requirements set out in the Notice on Cyber Hygiene (PSN06).

Business conduct

With regard to the PS Act and the Notice on Conduct (PSN07), your company must comply with business conduct requirements i.e. the safeguarding of customers’ monies, issuance of receipts and the display of exchange rates and fees.

Disclosures and communications

In relation to the Notice on Disclosures and Communications (PSN08), your company is also obligated to make accurate representations on the scope of its licence, and ensure that customers receive timely updates regarding any material changes to existing disclosures.

Annual audit requirements 

Your company must appoint an auditor to carry out an audit of its accounts and transactions on an annual basis. The audit report should be submitted to the MAS in Form 4.

If you’ve decided to provide digital payment token services, it is imperative that you apply for the necessary licence beforehand, and commence digital payment operations only after you have acquired one. Failure to do so may result in the suspension of your business.

To increase your chances of successfully obtaining a digital payment token licence in Singapore, consider working with a fintech lawyer.

A good lawyer who understands both the MAS requirements, and the nature of digital payment token businesses, will be able to guide you through the application process and ensure you comply with the relevant regulatory frameworks.

Appointment and Removal of Company Officers and Other Key Personnel
  1. What is a Nominee Director, How to Appoint and Other FAQs
  2. Appointing Company Directors in Singapore: Eligibility, Process etc.
  3. Managing Director vs CEO in Singapore: Roles and Obligations
  4. Guide to Directors' Remuneration in Singapore
  5. Directors' Duties in Singapore
  6. Shadow Directors: Who are They and What Duties Do They Owe to the Company?
  7. How to Remove a Director from a Company in Singapore
  8. Removal and Resignation of Company Auditor in Singapore
  9. Appointing a Company Secretary: Roles and Responsibilities
  10. Appointing an Authorised Representative for Foreign Companies in Singapore
  11. Process Agents in Singapore
Holding Meetings
  1. What are Annual General Meetings (AGMs) in Singapore?
  2. How to Hold Extraordinary General Meetings (EGMs) in Singapore
  3. How to Hold a Board Meeting in Singapore
Shareholder Matters
  1. Share Buybacks in Singapore: Procedure, Cost and More
  2. How to Split Shares (or Stocks) in a Singapore Company
  3. 2 Ways to Remove a Singapore Company Shareholder ASAP
  4. Guide to Paid-Up Capital in Singapore (Is $1 Enough?)
  5. Preparing a Register of Shareholders for a Singapore Company
  6. How to Issue Shares in a Singapore Private Company
  7. Guide to Transferring Shares in a Singapore Private Company
  8. Your Guide to Share Certificates in Singapore: Usage and How to Prepare
  9. Shareholder Rights in Singapore Private Companies
  10. Shareholder Roles and Obligations in Singapore Companies
  11. Dividend Payments Guide for Singapore Business Owners
  12. Share Transmission: What Happens If a Shareholder Dies in Singapore?
  13. How to Reduce the Share Capital of Your Singapore Company
  14. Buy-Sell Agreements: How to Write & Fund Them in Singapore
  15. Oppression of Minority Shareholders
Compliance
  1. Is Your Business Collaboration Competition Law-Compliant?
  2. Explained: Registered Filing Agent for Singapore Businesses
  3. Essential Regulatory Compliance Guide for Singapore Companies
  4. Dormant Companies and Their Filing Obligations in Singapore
  5. Anti-Money Laundering Regulations and Your Business: What You Need to Know
  6. Price-Fixing, Bid-Rigging and Other Anti-Competitive Practices to Avoid
  7. Legally Conducting Lucky Draws for Singapore Businesses
  8. Restaurant Inspection and Food Safety Rules in Singapore
Company Management
  1. Does Your Company Need a Legal Team (In-House Counsel)?
  2. Acqui-Hiring of Singapore Companies: How Does It Work?
  3. How to Change the Name of Your Singapore Company
  4. Can Directors be Liable for Company Debts in Singapore?
  5. Company Loans to Directors/Shareholders in Singapore
  6. 3 Types of Insurance Every Singapore Business Needs
  7. Creating and Registering Charges in Singapore: Guide for Companies
  8. Guide to Effective Business Continuity Planning in Singapore
  9. Business Asset Sale & Disposal in Singapore: How Do They Work?
  10. Business Partnership Disputes in Singapore: How to Resolve
  11. How to Commence a Derivative Action on Behalf of a Company in Singapore
  12. Business Will: How to Pass on Your Business to Your Successors in Singapore
Company Documents
  1. Record-Keeping Requirements for Singapore Companies
  2. Company Constitutions in Singapore and How to Draft One
  3. Company Memorandum and Articles of Association
  4. Company Resolutions: What are They?
  5. Board Resolutions in Singapore
  6. Minutes of Company Meeting in Singapore: How to Record
  7. How to Set Up a Register of Controllers
  8. How to Set Up a Register of Nominee Directors
  9. Guide to Filing Financial Statements for Singapore Business Owners
  10. Filing Annual Returns For Your Business
Tax, Accounting and Audit Matters
  1. Carbon Tax in Singapore: What is the Rate and Who Must Pay?
  2. Singapore Corporate Tax: How to Pay, Tax Rate, Exemptions
  3. Start-Up Tax Exemption Guide for New Singapore Companies
  4. GST Registration: Requirements and Procedure in Singapore
  5. What is Withholding Tax and When to Pay It in Singapore
  6. Singapore Influencers: Here's How to Calculate Your Income Tax
  7. Tax Investigation of Tax-Evading Business Owners in Singapore
  8. Small Business Accounting Services in Singapore
  9. Company Audits in Singapore: Requirements and Exemptions
Data Protection
  1. Suspect a PDPA Data Breach? Here's What to Do Next
  2. Must You Notify PDPC About a Data Breach in Your Business?
  3. Data Room: Should Your Singapore Company Set Up One?
  4. Summary: Your Organisation's 10 Main PDPA Obligations
  5. Essential PDPA Compliance Guide for Singapore Businesses
  6. PDPA Consent Requirements: How Can Your Business Comply?
  7. Is It Legal for Businesses to Ask for Your NRIC in Singapore?
  8. Here's a 7-Step Plan for Companies to Prevent Unauthorised Disclosure When Processing and Sending Personal Data
  9. Cloud Storage of Personal Data: Your Business’ Data Protection Obligations
  10. Drafting a Comprehensive Privacy Policy For Your Singapore Website
  11. GDPR Compliance in Singapore: Is it Required and How to Comply
  12. Appointing a Data Protection Officer For Your Business: All You Need to Know
  13. How Can Companies Dispose of Documents Containing Personal Data?
  14. Check the Do-Not-Call Registry Before Marketing to Singapore Phone Numbers
  15. How to Legally Install CCTVs for Home/Business Use in Singapore
  16. Is Web Scraping or Crawling Legal in Singapore?
  17. Legal Options If Employees Breach Confidentiality in Singapore
Marketing
  1. Social Media Marketing: Legal Guide for Singapore Businesses
  2. Your Guide to E-commerce Website Terms of Service in Singapore
  3. Dealing with Defamation of Your Business: Can You Sue?
  4. Sending Email Newsletters That Comply With Singapore Law
  5. A legal guide to drafting a social media policy for your company
  6. Your Guide to a Media Release Form in Singapore
  7. Your Guide to an Influencer Marketing Agreement in Singapore
  8. Outdoor Advertising: How to Legally Display Public Ads in Singapore
Fintech and Payment Services Advisory
  1. Applying to the MAS FinTech Regulatory Sandbox
  2. Payment Services Act Licensing Guide for Fintech Businesses
  3. How to Get a Payment Service Provider Licence in Singapore
  4. Financial Adviser's Licence Guide for Singapore Businesses
  5. Capital Markets (CMS) Licence Requirements in Singapore
  6. How to Offer E-Wallet Services in Singapore: Licensing Guide
  7. Digital Payment Token Services Licence Guide in Singapore
  8. How to Legally Offer Crypto Services in Singapore
Franchising
  1. Starting a Franchise in Singapore: What Franchisors Should Look Out For
  2. Running a Franchise in Singapore: What To Look Out for as a Franchisee
Debt Restructuring
  1. What is Judicial Management and How It Works in Singapore
  2. Schemes of Arrangement: How They Work and How to Apply
  3. Informal Debt Restructuring and Workout in Singapore
Ending a Business
  1. How to Restore a Struck-Off Company in Singapore
  2. Claw-Back of Assets From Unfair Preference and Undervalued Transactions
  3. Should You Save or Close Your Zombie Company in Singapore?
  4. Voluntary Suspension of Business in Singapore: How to Handle
  5. Winding Up a Singapore Company: Grounds and Procedure
  6. Closing Your Singapore Business: What You Need to Settle
  7. Striking Off a Company
  8. Restoring a Company That was Struck Off Without You Knowing
  9. Dissolution of partnerships in Singapore
  10. What Should a Creditor Do When a Company Becomes Insolvent?
  11. How to File a Proof of Debt Against a Company in Liquidation
  12. Validation of Payments Made by Companies Being Wound Up