How to Legally Offer Crypto Services in Singapore
Digital Payment Tokens (DPTs), or more popularly known as cryptocurrencies, present potential for a truly decentralised and digital form of currency in the global financial market. Indeed, some businesses have even begun to offer DPTs as a payment option alongside conventional options such as credit card and cash payment.
Nevertheless, DPTs as a means of payment have not become mainstream yet and regulations over the practice vary across the world. If you are a business owner seeking to offer DPT services to the public in Singapore, it is important to note the guidelines governing their use in Singapore. This article will provide an overview of how you can legally provide DPT services. It will cover:
What Should DPT Service Providers Take Note of When Providing DPT Services in Singapore?
Following the growing popularity of DPTs, and concerns over their novelty and complexity, the Monetary Authority of Singapore (MAS) has issued Guidelines on Provision of Digital Payment Token Services to the Public (the Guidelines) for DPT service providers. The Guidelines seek to address the potential risks associated with the use of DPTs amongst inexperienced members of the general public.
Besides the inherent risk of DPTs due to the highly speculative nature of their value, other risks include the fact that many DPT operators run their investment schemes online or overseas. This makes it harder to verify their credibility and could potentially leave investors with limited recourse in the event that the scheme fails. Moreover, the pseudo-anonymous nature of DPT transactions can potentially implicate investors in illegal activities such as money laundering or terrorist financing.
If you are an entity providing any type of payment services in Singapore, including services involving DPTs, then your entity is regulated by the Payment Services Act (PSA). Services involving DPTs include the:
- Transfer of DPTs
- Provision of custodian wallet services for DPTs
- Facilitating the exchange of DPTs without possession of monies or DPTs by the DPT service provider.
The PSA in turn requires such entities to obtain a licence to provide the relevant DPT services if they haven’t already done so.
Your business should not promote any DPT services you provide to the general public. This means that advertisements in public areas in Singapore, or media directed at the general public in Singapore, are not allowed.
Likewise, DPT service providers should not engage third-parties, such as social media influencers, to solicit new customers. However, DPT service providers may promote their service on their own corporate websites, mobile applications or official social media accounts.
This is provided that the promotional content does not trivialise the risks of trading in DPTs. Any such content must also include a risk warning statement that highlights the risks associated with trading in DPTs to all customers and potential customers. Thus, sharing the anecdotes of existing clients who benefited from trading in DPTs in public areas, or through broadcast media, is not allowed as these seek to appeal to the general public by suggesting that investing in DPTs is promising.
Provision of DPT services in public areas
Consistent with the prohibition against promoting DPT services to the general public, DPT service providers are also prohibited from providing in-person access to DPT services in public areas through automated teller machines (ATMs).
Doing so is considered a form of prohibited promotion of DPT services. MAS is of the view that by providing such convenient access, your business can mislead the public into engaging in DPT trading without adequate information as to the risks and complexities, contrary to the Guidelines.
If your business has already installed ATMs that provide the public with access to the DPT services, these ATMs should be removed as soon as possible. For example, soon after the Guidelines were issued in January 2022, ATMs offering services to trade Bitcoins and Ether, which are popular forms of DPTs, were immediately shut down from various central locations in malls such as Clarke Quay and Raffles Boulevard.
Provision of services relating to DPT-related products
Besides services directly concerning the trading of DPTs, the Guidelines also address the provision of services relating to DPT-related products such as payment token derivatives (PTDs), which are derivatives contracts that reference DPTs as underlying assets.
Derivatives contracts refer to any contract or arrangement requiring a party to discharge certain obligations at some time in the future, and where the value of which is determined by reference to the value or amount of certain “underlying assets. In the case of PTDs, DPTs constitute such “underlying assets”.
If your business offers services in PTDs as described above, the Guidelines state that businesses should not promote PTDs as a convenient unregulated alternative to DPT trading to the general public. This means that you should not encourage the general public to engage your PTD services by soliciting customers, or by advertising your PTD services through avenues accessible to the general public.
Beyond the promotion of any PTD products you may offer, where customers do engage your PTD services, you should take all necessary steps to ensure that customers do not confuse such services as being regulated by the MAS. This is because PTD services can be offered only through legal entities that are not licensed under the PSA.
Are DPT Service Providers Required to Comply with the Guidelines?
The Guidelines detail various recommendations that businesses offering DPT services should comply with. However, these Guidelines are not legally binding in themselves. Nevertheless, this does not mean that there will be no legal implications for not complying with the Guidelines.
What are the Potential Consequences of Not Complying with the Guidelines?
While the failure to comply with the Guidelines does not of itself render your business liable to criminal proceedings, any such failure may potentially provide a basis for legal proceedings against your business. In turn, your business may be subject to consequences based on the findings of a court or a relevant legal authority, such as the payment of compensation.
The rise in DPTs may be seen as presenting highly accessible opportunities for all. That said, it is important to note the various rules regulating the provision of DPT and DPT-related products, as well as the concerns underlying them, if you are offering or are planning to offer DPT services in Singapore.
It is also important to note that the landscape for DPT services is rapidly changing and that the Guidelines issued by the MAS are subject to modifications as the government deems necessary.
In view of such potential developments, it is advisable to consult a Singapore fintech lawyer experienced in this area to ensure that any DPT or PTD services your business offers, or intends to offer in the future, in Singapore remains within legal limits at any given point.
- What is a Nominee Director, How to Appoint and Other FAQs
- Independent Directors: Who are They and What is Their Role?
- Appointing Company Directors in Singapore: Eligibility, Process etc.
- Managing Director vs CEO in Singapore: Roles and Obligations
- Guide to Directors' Remuneration in Singapore
- Directors' Duties in Singapore
- Shadow Directors: Who are They and What Duties Do They Owe to the Company?
- How to Remove a Director from a Company in Singapore
- Removal and Resignation of Company Auditor in Singapore
- Appointing a Company Secretary: Roles and Responsibilities
- Appointing an Authorised Representative for Foreign Companies in Singapore
- Process Agents in Singapore
- Share Buybacks in Singapore: Procedure, Cost and More
- How to Split Shares (or Stocks) in a Singapore Company
- 2 Ways to Remove a Singapore Company Shareholder ASAP
- What are Treasury Shares? Guide for Singapore Companies
- Guide to Paid-Up Capital in Singapore (Is $1 Enough?)
- Preparing a Register of Shareholders for a Singapore Company
- How to Issue Shares in a Singapore Private Company
- Guide to Transferring Shares in a Singapore Private Company
- Your Guide to Share Certificates in Singapore: Usage and How to Prepare
- Shareholder Rights in Singapore Private Companies
- Shareholder Roles and Obligations in Singapore Companies
- Dividend Payments Guide for Singapore Business Owners
- Share Transmission: What Happens If a Shareholder Dies in Singapore?
- How to Reduce the Share Capital of Your Singapore Company
- Buy-Sell Agreements: How to Write & Fund Them in Singapore
- Oppression of Minority Shareholders
- Is Your Business Collaboration Competition Law-Compliant?
- Explained: Registered Filing Agent for Singapore Businesses
- Transfer Pricing Obligations of Singapore Companies
- Adhering to Trading Sanctions and Restrictions in Singapore
- Cyber Hygiene Compliance Guide for Singapore Companies
- Essential Regulatory Compliance Guide for Singapore Companies
- Dormant Companies and Their Filing Obligations in Singapore
- Anti-Money Laundering Regulations and Your Business: What You Need to Know
- Price-Fixing, Bid-Rigging and Other Anti-Competitive Practices to Avoid
- Legally Conducting Lucky Draws for Singapore Businesses
- Restaurant Inspection and Food Safety Rules in Singapore
- Does Your Company Need a Legal Team (In-House Counsel)?
- Acqui-Hiring of Singapore Companies: How Does It Work?
- How to Change the Name of Your Singapore Company
- Can Directors be Liable for Company Debts in Singapore?
- Company Loans to Directors/Shareholders in Singapore
- 3 Types of Insurance Every Singapore Business Needs
- Creating and Registering Charges in Singapore: Guide for Companies
- Guide to Effective Business Continuity Planning in Singapore
- Business Asset Sale & Disposal in Singapore: How Do They Work?
- Business Partnership Disputes in Singapore: How to Resolve
- How to Commence a Derivative Action on Behalf of a Company in Singapore
- Business Will: How to Pass on Your Business to Your Successors in Singapore
- Record-Keeping Requirements for Singapore Companies
- Company Constitutions in Singapore and How to Draft One
- Company Memorandum and Articles of Association
- Company Resolutions: What are They?
- Board Resolutions in Singapore
- Minutes of Company Meeting in Singapore: How to Record
- How to Set Up a Register of Controllers
- How to Set Up a Register of Nominee Directors
- Guide to Filing Financial Statements for Singapore Business Owners
- Filing Annual Returns For Your Business
- Carbon Tax in Singapore: What is the Rate and Who Must Pay?
- Laws and Penalties for GST Evasion in Singapore
- Singapore Corporate Tax: How to Pay, Tax Rate, Exemptions
- Start-Up Tax Exemption Guide for New Singapore Companies
- GST Registration: Requirements and Procedure in Singapore
- What is Withholding Tax and When to Pay It in Singapore
- Singapore Influencers: Here's How to Calculate Your Income Tax
- Tax Investigation of Tax-Evading Business Owners in Singapore
- Small Business Accounting Services in Singapore
- Company Audits in Singapore: Requirements and Exemptions
- Suspect a PDPA Data Breach? Here's What to Do Next
- Must You Notify PDPC About a Data Breach in Your Business?
- Data Room: Should Your Singapore Company Set Up One?
- Summary: Your Organisation's 10 Main PDPA Obligations
- Essential PDPA Compliance Guide for Singapore Businesses
- PDPA Consent Requirements: How Can Your Business Comply?
- Is It Legal for Businesses to Ask for Your NRIC in Singapore?
- Here's a 7-Step Plan for Companies to Prevent Unauthorised Disclosure When Processing and Sending Personal Data
- Cloud Storage of Personal Data: Your Business’ Data Protection Obligations
- GDPR Compliance in Singapore: Is it Required and How to Comply
- Appointing a Data Protection Officer For Your Business: All You Need to Know
- How Can Companies Dispose of Documents Containing Personal Data?
- Check the Do-Not-Call Registry Before Marketing to Singapore Phone Numbers
- How to Legally Install CCTVs for Home/Business Use in Singapore
- Is Web Scraping or Crawling Legal in Singapore?
- Legal Options If Employees Breach Confidentiality in Singapore
- Social Media Marketing: Legal Guide for Singapore Businesses
- Your Guide to E-commerce Website Terms of Service in Singapore
- Dealing with Defamation of Your Business: Can You Sue?
- Sending Email Newsletters That Comply With Singapore Law
- A legal guide to drafting a social media policy for your company
- Your Guide to a Media Release Form in Singapore
- Your Guide to an Influencer Marketing Agreement in Singapore
- Outdoor Advertising: How to Legally Display Public Ads in Singapore
- Applying for a Major Payment Institution Licence in Singapore
- Applying to the MAS FinTech Regulatory Sandbox
- Payment Services Act Licensing Guide for Fintech Businesses
- How to Get a Payment Service Provider Licence in Singapore
- Financial Adviser's Licence Guide for Singapore Businesses
- Capital Markets (CMS) Licence Requirements in Singapore
- How to Offer E-Wallet Services in Singapore: Licensing Guide
- Digital Payment Token Services Licence Guide in Singapore
- How to Legally Offer Crypto Services in Singapore
- How to Restore a Struck-Off Company in Singapore
- Claw-Back of Assets From Unfair Preference and Undervalued Transactions
- Should You Save or Close Your Zombie Company in Singapore?
- Voluntary Suspension of Business in Singapore: How to Handle
- Winding Up a Singapore Company: Grounds and Procedure
- Closing Your Singapore Business: What You Need to Settle
- Striking Off a Company
- Restoring a Company That was Struck Off Without You Knowing
- Dissolution of partnerships in Singapore
- What Should a Creditor Do When a Company Becomes Insolvent?
- How to File a Proof of Debt Against a Company in Liquidation
- Validation of Payments Made by Companies Being Wound Up