This past week, Singapore MP Yip Hon Weng queried public officials about the risk of money laundering and fraud in the cryptocurrency markets. Singapore has emerged as a top hub for digital asset innovation with some firms moving to the country due to its Fintech-friendly regulation.
The MP asked the Prime Minister about Singapore “opening up cryptocurrency,” and if there is a growing number of crypto firms setting up operations and what type of risk mitigation is in place to prevent money laundering and fraudsters from operating out of Singapore. The inquiry was answered by Tharman Shanmugaratnam, Senior Minister and Minister in charge of the Monetary Authority of Singapore (MAS).
The Minister said that DPTs, or digital payment tokens, and firms that enable transactions are regulated under the Payments Services Act of 2019 (PS Act). Under the PS Act, oversight focuses on money laundering and terrorism financing risks and technology risks.
“It administers a rigorous licensing process to ensure that we admit DPT service providers with strong governance structures and robust controls to address these risks. Many applicants have been turned away. Where MAS has reason to suspect that an applicant is involved in illicit activities, MAS will, besides rejecting the application, refer the matter to the Police for investigation.”
The Minister added that MAS also conducts surveillance to uncover unlicensed firms that may attempt to provide services or solicit consumers in Singapore. Additionally, MAS is said to be working closely with law enforcement to combat crypto scams adding that consumers should check and see if entities are licensed or have an exemption prior to utilizing them.
The Minister did not share the number of crypto firms operating in Singapore.
In August, Ravi Menon, Managing Director, MAS, delivered a speech on digital assets entitled yes to innovation but not to crypto speculation. Menon said, “MAS has a stringent and lengthy licensing process for those who want to carry out crypto-related services. MAS has also been issuing strong warnings against retail investments in cryptocurrencies and has been taking increasingly stronger measures to restrict retail access to cryptocurrencies.”
He added that the price volatility of crypto “rules them out as a viable form of money or investment asset.” At the same time he acknowledged the benefits of tokenizing real assets as well as the potential for payments and settlements.
Singapore’s financial industry transformation objectives include the development of digital infrastructure and platforms.