Singapore regulates a broad range of financial activities, including the following:

• Banking business – This covers the business of receiving money on a current or deposit account, paying and collecting checks drawn by or paid in by customers, and making advances to customers.
  
  
• Dealing in capital markets products – This includes marketing or dealing in and introducing broker activity in relation to capital markets products, which includes securities, debentures, units of collective investment schemes (CIS), exchange-traded derivatives, over-the-counter derivatives, and spot foreign exchange contracts for the purpose of leveraged foreign exchange trading.
  
  
• Financial advisory services – This covers advising others concerning any investment products (including securities, debentures, units of CIS, exchange-traded derivatives, over-the-counter derivatives, spot foreign exchange contracts, structured deposits and life policies), issuing or promulgating research analyses or research reports concerning any investment products, and arranging life policies.
  
  
• Fund management – This covers (a) the management of the property of, or the operation of, a CIS, or (b) undertaking on behalf of customers (whether on a discretionary authority granted by the customer or otherwise) (i) the management of a portfolio of capital markets products, or (ii) the entry into spot foreign exchange contracts for the purpose of managing the customer’s funds. This, however, excludes real estate investment trust management where the real estate investment trust is listed for quotation on a Singapore approved exchange.
  
  
• Insurance or insurance broking business – The insurance business broadly includes insurers and reinsurers concerned with life and non-life policies. Insurance brokers are persons who carry out insurance business as agents for the insured.
  
  
• Issuing credit and charge cards – Credit and charge card refers to any article, whether in physical or electronic form, intended for use in purchasing goods or services on credit.
  
  
• Payment services – The following payment services are regulated:
  • Money-changing – This refers to the service of buying or selling foreign currency notes.
  • Account issuance – This refers to issuances of payment accounts to any person in Singapore, and the services relating to any operation required for operating a payment account.
  • Domestic money-transfer – This refers to the service of accepting money for the purpose of executing, or arranging for the execution of prescribed payment transactions, each of which is between a payer in Singapore and a payee in Singapore (except in a case where both the payer and the payee are financial institutions).
  • Cross-border money transfer – This refers to any of the following:
  • Any service of accepting money in Singapore, whether as principal or agent, for the purpose of transmitting, or arranging for the transmission of, the money to any person outside Singapore (other than any such service that the MAS may prescribe)
  • Any service of receiving any money from outside Singapore for, or arranging for the receipt of any money from outside Singapore by, any person in Singapore (other than any such service that the MAS may prescribe), whether as principal or as agent
  • Any service of arranging for the transmission of money from any country or territory to another country or territory, whether as principal or agent (other than any such service that the MAS may prescribe).
  • Merchant acquisition – This refers to any service of accepting and processing a payment transaction for a merchant under a contract between the provider of the service and the merchant, which results in a transfer of money to the merchant pursuant to the payment transaction, regardless of whether the provider of the service comes into possession of any money in respect of the payment transaction.
  • E-money issuance – This refers to the service of issuing e‑money to any person for the purpose of allowing a person to make payment transactions, where "e-money" means any electronically stored monetary value that is denominated in any currency (or pegged by its issuer to any currency), has been paid for in advance to enable the making of payment transactions through the use of a payment account, is accepted by a person other than its issuer; and represents a claim on its issuer, but does not include any deposit accepted in Singapore, from any person in Singapore.
  • Digital payment token (DPT) service – DPT services are also regulated as a payment service and includes the following:

1. Any service of dealing in DPT, i.e., buying or selling of DPT in exchange for money or DPTs (whether of the same or a different type)
2. Any service of facilitating the exchange of DPTs
3. Any service of accepting (whether as principal or agent) DPTs from one DPT account (whether in Singapore or elsewhere), for the purposes of transmitting, or arranging for the transmission of, the DPTs to another DPT account (whether in Singapore or elsewhere)
4. Any service of arranging (whether as principal or agent) for the transmission of DPTs from one DPT account (whether in Singapore or elsewhere) to another DPT account (whether in Singapore or elsewhere)
5. Any service of inducing or attempting to induce any person to enter into or to offer to enter into any agreement for or with a view to buying or selling any DPT in exchange for any money or any other DPT (whether of the same or a different type)
6. Any service of safeguarding a DPT, where the service provider has control over the DPT
7. Any service of carrying out for a customer an instruction relating to a DPT, where the service provider has control over the DPT
8. Any service of safeguarding a DPT instrument, where the service provider has control over one or more DPTs associated with the DPT instrument
9.  Any service of carrying out for a customer an instruction relating to one or more DPTs associated with a DPT instrument, where the service provider has control over the DPT instrument.

Do note that some of the payment services above (e.g., domestic money transfer where either payor or payee is a financial institution; cross border money transfer where funds are not received into or paid out from Singapore; and digital payment token services (iii) to (ix) above) became regulated payment services on 4 April 2024.

• Designated payment systems  ̶  Operators and settlement institutions of designated payment systems (generally, a funds transfer system or another system that facilitates the circulation of money and includes any instruments and procedures that relate to the system that the MAS has designated under the Payment Services Act 2019) will be subject to regulations under the Payment Services Act 2019.

• Other capital markets intermediaries – This includes advising on corporate finance, real estate investment trust management, product financing, and provision of credit rating services.
  
  
• Providing custodial services – This includes having custody of specified products (including securities, specified securities-based derivatives contracts or units in a CIS) and carrying out functions such as the settlement of transactions, collecting or distributing dividends, paying tax or costs associated with the securities, exercising rights attached to securities, and others necessary or incidental to the safeguarding or administration of the specified products.
  
  
• Operating an organized market – This includes a market for being a place or facility where offers or invitations to exchange, sell or purchase derivatives contracts, securities or units of CIS are regularly made on a centralized basis, and where such offers or invitations are intended or may reasonably be expected to result, whether directly or indirectly, in the acceptance or making of offers to sell or purchase such products, whether through that place or facility or otherwise.
  
  
• Others – Clearing houses, trade repositories and financial benchmarks administrators and submitters, moneylenders, and spot commodity brokers/financial advisers/pool operators are subject to licensing and regulations as well. 
  
  
• Prospectus requirements/selling restrictions – The offer of securities, debentures and units in CIS may also trigger prospectus requirements unless exemptions can be relied on.

For each of these activities, certain exemptions from the requirement to be licensed, registered, authorized or recognized may apply.

Financial Services and Markets Act 2022

The FSMA is intended to align local AML/CFT standards with those set by the Financial Action Task Force. When implemented, it will allow the MAS to regulate virtual asset service providers for money laundering and terrorist financing risks by ensuring that they are at least licensed or regulated in the jurisdiction in which they are created. Accordingly, the MAS can regulate digital token service providers who fall outside or seek to fall outside of the licensing frameworks of the Securities and Futures Act 2001 and Payment Services Act 2019 by carrying on regulated activities outside of Singapore despite being established in Singapore. Both DPTs and digital representations of a capital markets product (which includes securities and derivatives) that can be transferred, stored or traded electronically, and that satisfy such other characteristics as the MAS may prescribe, fall within the scope of "digital token" under the FSMA. Any person providing relevant services in relation to token services will require a license. The list of regulated digital token services is similar to the list of regulated DPT services, except that it applies to all digital tokens and not just DPTs, and there is also the addition of the following as a digital token service:

• Any service relating to the sale or offer for sale of digital tokens that involves either of the following:
  • Providing advice, either directly or through publications or writings, and whether in electronic, print or other form, relating to any digital tokens
  • Providing advice by issuing or promulgating research analyses or research reports, whether in electronic, print or other form, relating to any digital tokens

Please note that this is the portion of the statute regulating digital token services not yet in force, and it is unclear when it will come into effect.

Crypto-assets and cryptocurrencies

The specific nature and functions of crypto-assets and cryptocurrencies need to be assessed to determine how they are regulated in Singapore. Generally:

• Crypto-assets such as security tokens that satisfy the definition of "capital markets products" would be regulated under the securities and capital markets regulatory regime under the Securities and Futures Act 2001.
• Cryptocurrencies such as Bitcoin and Ether are regulated as DPTs under the Payment Services Act 2019.
• Stablecoins, at present, may constitute DPTs. That said:
  • The characteristics of each stablecoin will need to be assessed to determine its classification. The MAS had clarified in the FAQs on the Payment Services Act 2019 that based on their characteristics today, stablecoins such as USD Coin and Tether are deemed as DPTs.
  • There are plans by the MAS to carve out a specific class of stablecoins. Please refer below.

At the moment, payment token derivatives that are not issued on an approved exchange in Singapore are not regulated. Utility tokens that do not fall within the scope of local regulation would also not be regulated.

Any person that handles or deals in crypto-assets/cryptocurrencies will be regulated under the Securities and Futures Act 2001 (and potentially the Financial Advisers Act 2001) or Payment Services Act 2019 (depending on the characteristics of the crypto-assets/cryptocurrencies, if the person's activities fall within a regulated activity under the Securities and Futures Act 2001 (or financial advisory service under the Financial Advisers Act 2001), or digital payment token services under the Payment Services Act 2019, as applicable.

For any person that falls outside or seeks to fall outside the Securities and Futures Act 2001, Financial Advisers Act 2001 or Payment Services Act 2019 on the basis that they conduct their regulated activities outside Singapore, such person may be regulated under the FSMA instead, as explained above.

Proposed stablecoin regime

The MAS has indicated in a recent Response to Consultation on Stablecoins that they will go ahead to implement a stablecoin regulatory regime in Singapore. Stablecoins that are within this new regulatory regime are only those that are pegged to a single currency where the currency is SGD or any of the other G10 currencies, and are issued in Singapore (MAS-regulated stablecoin). Stablecoins that are not single-currency pegged, and single-currency pegged stablecoins that are algorithmically-pegged, unbacked, backed by other cryptocurrencies, or backed by non-SGD or non-G10 currencies, will, broadly speaking, continue to be treated as DPTs.

Under the stablecoin regulatory regime, issuances of MAS-regulated stablecoins will be regulated as a new regulated payment service under the Payment Services Act 2019, and issuers with more than SGD 5 million of MAS-regulated stablecoins in circulation will be required to obtain a major payment institutions license and be subject to regulation relating to reserve assets, redemption at par, prudential requirements, white paper issuance, AML/CFT, and technology and cyber-risk. However, stablecoin intermediary services — even when it relates to MAS-regulated stablecoins — will continue to be regulated as DPT services.

If the SGD 5 million threshold is not exceeded, the stablecoin issuer does not need to apply for a license and will not be subject to the stablecoin regulatory regime, though it may nonetheless require a standard payment institution or major payment institution license if its activities fall within the scope of DPT services or any other regulated payment service for that matter.

Retail investors

With the recent launch of Bitcoin exchange traded funds (ETFs), the MAS has stated that they do not consider Bitcoin to be an eligible asset for retail ETFs and therefore, the listing of spot Bitcoin ETFs is not allowed in Singapore. That said, we understand that Bitcoin ETFs in foreign markets can still be accessed in Singapore via licensed financial institutions. To this end, the MAS maintains its position that cryptocurrency and crypto-assets are generally too volatile and speculative to be suitable for retail investors.

In this regard, the MAS has also increased protection for retail investors. For instance, the MAS has issued guidelines on the provision of DPT services to the public and disallows the placing of any form of advertisements or promotional materials in public areas (e.g., public transport, social media platforms) by DPT service providers or the use of third parties, such as social media influencers or third-party websites, to promote their DPT services to the general public in Singapore. This is already in force. Down the line, the MAS is also intending to implement further consumer access measures, such as by prohibiting DPT service providers from offering incentives (monetary or otherwise) to prospective and existing retail customers (e.g., learn and earn programs and referral incentives).

DPT service providers will also, going forward, be subject to enhanced business conduct regulations, including a prohibition on lending and staking retail customers' digital payment tokens. This prohibition will come into effect in October 2024.