Money laundering and terrorism financing are the two key reasons for the new bill, while consumer protection and saving their funds were not far from MAS's consideration.
November 20, 2018 AtoZ Markets -The Monetary Authority of Singapore (MAS), which is also the central bank in the country, has expanded its regulatory labels for payment providers, aiming to bring cryptocurrencies under its jurisdiction, as the local broadsheet Straits Times said on Nov. 19.
MAS board member and education minister Ong Ye Kung intends in his New Payment Bill (PSB), to replace two legislation provisions; the Payment Systems (Oversight) Act (PS(O)A) and the Money-Changing and Remittance Businesses Act (MCRBA).
The bill, which has reportedly passed two public consultations since it was first suggested in August 2016, looks for more protection of consumer funds, along with countering terrorism financing, in addition to consolidating cybersecurity.
The new PSB system is expected to impact digital payment tokens such as GrabPay, Bitcoin (BTC), and Ethereum (ETH), as well as e-wallets, as it replaces both PS(O)A and MCRBA, once it comes into force at the end of 2019.
Which licence for who?
According to the regulatory body, PSB works within two parallel frameworks. As the first is described to be “designation regime”, it allows the central bank to observe the payment systems it considers as important for financial stability, while the second contains a “mandatory licensing regime”, requiring payment service providers to apply for one of three licenses, in accordance with the nature of their businesses.
The MAS has detailed the licences to be as the following: the first one focuses on “money-changers”, which focuses on curbing money laundering and terrorism financing, while another licence, named “standard payment institution license” is designed for entities that transact over $3 million per month, if their overall backup does not exceed $5 million, whereas larger service providers fall under the bill of “major payment institution”, which includes the most inclusive framework among the three licences.
On the other hand, the MAS has allowed the token payment service providers six months after the new bill comes into force, where they have to comply with the new regulations. Payment providers who do not deal with cryptos have up to twelve months.
In the context of highlighting the need for improving the banking support for businesses pertaining to cryptocurrency, the managing director of MAS Ravi Menon referred last month to that encouragement needed for financial institutions, for adapting their existing practices to the emerging sector, stressing that some “opaque” cryptocurrency activities impose specific challenges.