The Monetary Authority of Singapore has released its plans to further control and regulate the current elusive virtual currency market and intermediaries that facilitate their online trade in Singapore. The anonymity surrounding so-called crypto currencies such as bitcoin raises questions over potential money laundering & terrorist financing risks.
Once established, the regulations will require all virtual currency intermediaries involved with the buying, selling or facilitating the exchange of virtual currency for physical currency to:
- Verify the full identities of their customers, similar to a background check.
- Monitor and record all transactions completed via the intermediary.
MAS is reviewing the proposed legislation and will conduct a further public consultation later in the year to address any issues about the strict proposals. Once the regulations come into force, businesses which are engaged in virtual currency-related financial activities may then be required to implement the relevant legislation accordingly.
Moreover, the offer or issuance of digital currencies in Singapore will be regulated if the digital tokens constitute products falling under the Securities and Futures Act (Cap. 289).
Where digital currencies fall within the definition of securities in the SFA, not only traders, but issuers would also be required to lodge and register with MAS prior to the commencement of issuance or trading. Issuers or intermediaries of such tokens would also be subject to licensing requirements under the SFA and Financial Advisers Act (Cap. 110), and the applicable requirements on anti-money laundering and countering the financing of terrorism. The types of digital currencies offered in Singapore and elsewhere vary widely. Some offers may be subject to the SFA while others may not be.
All issuers of digital tokens, intermediaries facilitating or advising on an offer of digital currencies and platforms facilitating trading should consequently seek independent legal advice to ensure they comply with all applicable legislation, and consult MAS accordingly.
Do you have any questions about the legalities of digital currency use in Singapore? Contact us, we can help.