All crypto businesses in Singapore are now required to first register and then apply for a license to operate in the jurisdiction under the Payment Services Act 2019 framework.
The new legislative framework brings so-called Digital Payment Token (DPT) services - effectively covering all crypto businesses and exchanges based in Singapore - under current anti-money laundering (AML) and counterterrorist-financing (CTF) rules.
The new rules place crypto services under the oversight of the Monetary Authority of Singapore. The regulator announced that the new framework is expected to "enhance the regulatory framework for payment services in Singapore, strengthen consumer protection and promote confidence in the use of e-payments"
The Payment Services Act provides a forward-looking and flexible regulatory framework for the payments industry"
The regulator's assistant managing director Loo Siew Yee said: "The Payment Services Act provides a forward-looking and flexible regulatory framework for the payments industry. The activity-based and risk-focused regulatory structure allows rules to be applied proportionately and to be robust to changing business models. The PS Act will facilitate growth and innovation while mitigating risk and fostering confidence in our payments landscape."
Increased investor interest in digital tokens has encouraged several regulators around the world to bring the venues under their scrutiny, especially for money laundering and other illicit activities.
The new act will also provide global crypto firms an opportunity to expand their business in Singapore as they will now be eligible to apply for operation licenses here.
Tokyo-based crypto exchange operator Liquid Group and London-based Luno, which already operate in Singapore, are among the firms planning to apply for the licences.
Twenty of the top 50 crypto exchanges in the world are based in the Asia-Pacific region and accounted for about 40% of Bitcoin transactions in Q1 2019.