All about the Payment Services Act and how it affects users of S’pore cryptography – Health Guild News

0
197


As more Singaporeans began to become aware of and interested in cryptocurrencies, MAS established its first regulatory framework to govern the purchase, sale, and facilitation of cryptocurrency exchange under the Payment Services Act (PSA).

Also known as PSA 2019 came into force on January 28 last year. It extends the scope of the existing PSA, aimed at improving the regulatory framework for payment services in Singapore, which includes operating as a provider of digital payment token services and other cryptographic services.

Digital payment token services are a newly regulated area and the PSA is enacted to ensure that payment structures establish guarantees against money laundering (AML) and the fight against financial terrorism (CFT). This includes having robust controls to detect and deter the flow of illicit funds through Singapore’s financial system.

The central bank measure comes as governments around the world continue to evaluate how best to regulate borderless cryptocurrencies that have grown in popularity. This is a growing concern, as cryptocurrencies can lead to illegal activities such as tax evasion and terrorist financing.

The price of Bitcoin, the most popular cryptocurrency, has skyrocketed in recent years / Image credit: CoinMarketCap

Elsewhere in the world, the United States has also said it will require cryptographic transfers with significant amounts to report, while China has taken a tougher approach, launching a campaign against it Bitcoin trading and mining.

Let’s take a look at how Singapore regulates the world of cryptography and its digital tokens through its PSA.

What is the Payment Services Act?

The PSA is a flexible and future-oriented framework for the regulation of payment systems and payment service providers in Singapore. This means that the act is still an active work in progress and is being debated in Parliament, along with the contributions of industry actors.

Prior to the PSA, cryptocurrency players were unsure whether it was legal to offer their services in Singapore. With PSA, this provides regulatory security and consumer guarantees, without stifling innovation and growth in the payment services and FinTech industries.

MAS established a regulatory framework to govern the purchase and sale of digital payment cards / Image credit: Reuters

The Singapore Parliament approved the renewed PSA on 14 January 2019, which required all digital payment service providers to be licensed to operate. The law expands the scope of regulated activities to a wider range of payment services and activities, from domestic money transfers, domestic remittances, merchant acquisition, to digital payment token services.

These digital payment card service providers must apply for an image license / credit: MAS

To obtain the license, virtual asset service providers must establish controls to ensure due diligence, proper application, and proper risk disclosure.

The PSA came into force in January 2020 and all digital payment token service providers operating in Singapore, including cryptographic exchanges, must be registered and licensed.

The law gives the Singapore Monetary Authority (MAS) the supervisory authority of payment companies to ensure, among other things, that they meet AML and CFT requirements.

Is it legal for me to buy Bitcoin in Singapore?

Currently, popular cryptocurrency exchanges in Singapore, such as Coinhako, Gemini and Huobi, operate under the PSA exemption framework. These cryptocurrency companies have requested and notified the MAS of their services, and the MAS had exempted them from the need to operate with a license, so that they can operate.

This means that you have to take full responsibility for your purchases. According to the government website MoneySense, people who buy or sell cryptocurrencies or facilitate the exchange of cryptocurrencies may be regulated under the PSA, but are not required to protect your cryptocurrency or are required to ensure that each cryptocurrency transaction is processed correctly. MAS regulates cryptocurrency service providers under the PSA, primarily only for the risk of money laundering and terrorist financing.

According to the PSA, cryptographic companies must provide the following disclaimer to all users:

RISK WARNING IN DIGITAL PAYMENT SERVICES

MAS requires us to provide you with this risk warning as a customer of a digital payment card (DPT) service provider.

Before paying money or DPT to your DPT service provider, you should consider the following.

1. Your DPT service provider is exempt from MAS from having a license to provide DPT services. Please note that you may not be able to recover all the money or DPT you paid to your DPT service provider if your DPT service provider’s business fails.

2. You do not have to transact with the DPT if you are unfamiliar with that DPT. DPT transaction may not be appropriate for you if you are unfamiliar with the technology provided by DPT services.

3. You should keep in mind that the value of DPTs can fluctuate a lot. You only need to buy DPT if you are willing to accept the risk of losing all the money you put in these tokens.

How can users check if a company is subject to the PSA?

Currently, digital payment card service providers have been operating in the Republic with the exemption of having a license under the PSA. What this means is that cryptocurrency service providers can now operate as if they had a license, even though they don’t have one.

The exemption is in effect until MAS approves or rejects the applications or the applicant withdraws them.

Consumers can check out this site to see if the service that provides cryptographic digital tokens has applied for a license.

In a answer a question in Parliament last month, MAS Prime Minister and President Tharman Shanmugaratnam said several applicants were in the final stages of review to obtain a license to operate as digital payment card service providers.

Several applicants are in the final stages of review to obtain a License / Image Credit Approval: BPP

Since the PSA began in January last year, about 170 applicants have applied to provide digital payment token services, Tharman said.

At that time, about 30 applications were withdrawn after the commitment with MAS, while two had been rejected. About 90 service providers operate with the exemption of having a license, he said.

License applicants are subject to strict control over the licensing process and the ongoing supervision of MAS.

“MAS has a serious view of weaknesses in controls to address money laundering and terrorist financing and technological risks and will reject applicants who fail to meet the required standards,” the central bank said.

Who has been approved to obtain a license?

The eight-year Independent Cryptographic Exchange Reserve said earlier this month it is one of the leading virtual asset service providers to obtain a letter of approval in principle from the much desired license.

The exchange established its first overseas operations in Singapore in 2019 to provide digital asset exchange and over-the-counter exchange services to individuals and institutions in the country.

Meanwhile, DBS also got the green light to be one of the first to receive “in principle” approval from the country’s financial regulator to offer encryption services.

DBS has obtained approval “in principle” to offer encryption services / Image credit: latest cryptography

Approval comes when DBS recently issued $ 15 million (US $ 11.3 million) digital link in its first offer of safety data sheets through its DBS Digital Exchange (DDex). The bank said it is working through the necessary steps with a focus on meeting MAS requirements.

In a response to the media, a MAS spokesman said MAS has notified several digital payment service providers that it is willing to grant regulatory consent for them to operate in the city state.

He added that applicants who have received these notifications from MAS do not yet have payment service licenses. “A license will then be granted to an applicant, as long as it puts in place the necessary measures to meet MAS requirements to be able to function as a licensee,” he said, adding that MAS continues to review token applications. pending digital payment.

How does this benefit consumers?

Central bank approvals are an encouraging sign for other companies awaiting MAS authorization, as the city-state is moving toward a fully regulated digital payments sector. The regulation is intended to promote greater use of payment slips that can reduce settlement time and costs, making digital payment slips widely used.

When its license is granted, DBS said it will be able to directly support administrators and companies through its DDex, where they will have access to their digital payment services.

Singapore moves towards a fully regulated digital payments industry / Image Credit: Unsplash

Commenting on what an approval of principle means for the Independent Reserve, had said Singapore’s managing director of the exchange, Raks Sondhi: “While operationally, things will not change from receiving approval in principle, consumers will have the peace of mind that we and others that we will receive your approvals in principle have met the high standards of MAS “.

He added that being one of the first companies to be approved a license “in principle” reflects the robustness of the risk management policies, procedures and systems the firm has established to guide its day-to-day operations.

This provides security for the cryptographic firm’s operations in the country, as well as security for customers who use its services.

The move to formalize cryptocurrency payment services also gives the Singapore government greater oversight and control over activities. As licensed entities, customers have the guarantee of central bank competition over corporate operations, making it better protection for users. The central bank is likely to take over any business if it does not comply with any regulatory rules.

Observers said development is likely accelerate the number of cryptocurrency companies moving to Singapore. Citizens of financial services have long seen the state city for its political stability and regulators open to experimentation.


As of July 1, 2021, Vulcan Post premium items will be hidden behind a pay wall. Subscribers will be able to enjoy exclusive articles with a higher level of coverage and information on verticals that include government technology, electric vehicles, cryptocurrency and e-commerce. You can check out our premium items here and subscribe to us here.


Featured Image Credit: Elliptical





Source link