The Central Bank of Singapore has established a deadline of June 30 for local crypto service providers to stop offering digital token (DT) services to foreign markets.
The directive came from the monetary authority of Singapore’s response (Mas) to industry comments on its regulatory framework proposed for digital token service providers (DSTP) under its 2022 financial and markets Act (FSM ACT).
Mas said that no transition agreement will be made for local DTSPs providing services abroad. He said that any company, no one or partnership in Singapore provides DT services outside of Singapore must either cease operations or obtain a license when the DTSP provisions come into force by the end of June.
“The DTSPs which are subject to a license requirement under article 137 of the FSM law must suspend or stop pursuing a company to provide DT services outside Singapore by June 30, 2025,” writes Mas.
Offenders could hear fines of almost $ 200,000
Under article 137 of the FSM law, companies based in Singapore are supposed to operate in Singapore and are therefore subject to licenses. This includes companies whose activities related to tokens abroad are not their main commercial activity.
Companies have found that the violation of laws will be subject to heavy fines of up to $ 250,000 Singaporean dollars ($ 200,000) and a prison sentence of up to three years.
Mas said that only approved or exempt companies under existing financial laws – Securities and Futures Act, the law on financial advisers or the payment services law – can continue to operate without conflict with the new rules.
Even if DTSPS could obtain a license, a lawyer said it would be in rare cases. In a LinkedIn post, Hagen Rooke, partner of Gibson, Dunn & Crutcher, said that the licenses will only be issued in rare cases, due to increased regulatory concerns concerning anti-terrorist financing (CFT) and anti-plats laundering (LMA).
“The MAS will grant licenses in the new framework only in extremely limited circumstances (such as this type of operating model generally causes regulatory concerns, for example LMA / linked to the CFT)”, wrote Rooke.
The lawyer urged companies to consider rapid actions to manage through operational restructuring in order to remove their contact points from Singapore.
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Singapore addresses cross -border risks
This decision indicates a major tightening of regulatory monitoring on cryptographic activity by the Singapore authorities. The DTSP mandate to stop activities abroad comes from regulatory developments aimed at resolving risks in the digital asset sector.
In April 2022, Singapore adopted the FSM bill, granting Mas a greater authority to regulate cryptographic companies which operate outside the country but which are based in Singapore.
The law obliges DTSP with operations abroad to comply with AML and CFT standards, even if they do not offer services in Singapore. Mas expressed his concerns that cryptographic companies can exploit regulatory gaps by registering in Singapore while carrying out unregulated activities abroad.
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