In a bid to regulate the payment system, Singaporean authorities went ahead with a new regulatory framework for payment services in the country. The new Payment system Bill was listed in the parliament for reading for the first time. The new bill was put forward by Mr. Ong Ye Kung, on behalf of Mr. Tharman Shanmugaratnam, Deputy Prime Minister and Minister-in-charge of the Monetary Authority of Singapore (MAS).
The new Bill proposes to put power in the hands of MAS to regulate seven types of payments including digital token systems. Some of the key features and areas of concern, where the bill aims make an impact are:
- money-laundering and terrorism financing (“ML/TF”);
- loss of funds owed to consumers or merchants due to insolvency;
- fragmentation and limitations to interoperability; and
- technology and cyber risks.
The Bill is divided into two main frameworks:
- Designation Framework for Significant Payment Systems:
The framework allows MAS to designate essential payment systems and regulate operators, settlement institutions and participants of these assigned payment systems for financial stability.
- Licensing Framework for Payment Service Providers:
This framework aims to put power in the hands of MAS to regulate payment services in the country. Some of the payment services that fall under the regulation bill are,
- account issuance service;
- domestic money transfer service;
- cross-border money transfer service;
- Merchant acquisition services.
- E-Money issuance service;
- digital payment token service;
- money-changing service.
The bill has a special section dedicated to cryptocurrencies and digital tokens referred to in the law as “digital payment token service”. The section also defines what all will fall under this category; it says, “buying or selling digital payment tokens (commonly known as cryptocurrencies), or providing a platform to allow persons to exchange digital payment tokens in Singapore”.
The bill will result in three classes of licenses, as a vendor or the service provider, one needs to hold only one license at a time related to their frame of work. MAS has the power to impose and regulate all the technological risks as well as the cybersecurity risk management on all the licenses that it issues.
To make sure that the Bill creates an impact, MAS will hold all the powers to regulated entities. They can conduct inspections, investigations, cancel a license and have emergency powers to dissolve the bill. The Bill will require all the connected objects to comply with the set general regulations at all the times.