Singapore to tighten laws for cryptocurrency firms in the country

• The Monetary Authority of Singapore has proposed stricter regulations for cryptocurrency businesses.
• The regulator currently overlooks digital asset firms that are situated in and conduct business only in Singapore. 
• If the new act is enforced, it would also regulate cryptocurrency firms that do business outside the country.

The Monetary Authority of Singapore (MAS) has recently proposed newer, stricter rules for cryptocurrency businesses. The rules are reportedly in line with the Financial Action Task Force (FATF) standards. MAS is looking to have extended powers to prohibit any unsuitable entity from conducting business in Singapore. It also wants to regulate and license cryptocurrency firms that provide services outside of the country.

The financial regulator has recently published a consultation paper titled "New Omnibus Act for the Financial Sector,” seeking public feedback on the "harmonized and expanded power" of the regulator. MAS has been regulating digital asset companies under the recently enacted Payment Services Act, which came into effect in January 2020. This act governs cryptocurrency companies that are located in and do business only in Singapore. The financial watchdog is now looking to monitor entities that are based in Singapore and conduct business overseas.

An excerpt from the consultation paper reads: 

Given the internet-based nature of such operations, there may be entities created in Singapore that do not perform such services in Singapore, but offer such services outside of Singapore and that are not captured under current legislation. MAS intends to regulate such entities for ML/TF [money laundering/terrorist financing] risks.

If the new act is enforced, any entity that is "not fit and proper" to engage in regulated activities could be issued a prohibition order. MAS noted that a similar approach had been adopted in the UK and Australia.