Singapore Regulatory Sandbox Faces Shortage of Competent Crypto Payment Providers

09 Sep, 2023

Singapore Regulatory Sandbox Faces Shortage of Competent Crypto Payment Providers

The Monetary Authority of Singapore (MAS) has clarified that no businesses have met the criteria to participate in its FinTech Regulatory Sandbox framework as cryptocurrency payment providers. This statement comes in response to a letter published in the Financial Times that criticized the Singaporean government for its perceived lack of public consultation and oversight regarding crypto adoption.

MAS emphasized that Singapore does not have a specific "crypto sandbox" but instead operates a sandbox that supports a wide range of fintech experimentation.

The criticism in the letter focused on Singapore's decision to grant crypto companies access to the Fast and Secure Transfers (FAST) interbank payment system. FAST enables customers of participating entities to transfer Singapore dollar funds between entities within Singapore. MAS clarified that any business with a valid bank account, including crypto companies, can access the FAST system. It was emphasized that payments made through FAST are in fiat currencies, not cryptocurrencies.

The regulatory authority also addressed the issue of rising malware scam cases in Singapore, asserting that these scams are not related to cryptocurrencies but are more prevalent in the fiat economy. These scams involve fraudsters gaining control of customers' mobile devices and making unauthorized transfers through the fiat banking system.

To combat money laundering, Singapore grants operational licenses to crypto businesses that demonstrate robust Anti-Money Laundering (AML) controls. These measures are set to be progressively implemented starting at the end of the current year, establishing Singapore as one of the world's strictest regulators when it comes to retail access to cryptocurrencies.

In alignment with its efforts to mitigate risks associated with cryptocurrencies for retail customers, MAS recently sought public input on a set of regulatory measures.

It's worth noting that Tharman Shanmugaratnam, the former MAS Chair who has expressed concerns about crypto's riskiness in the past, won Singapore's presidential race. In his previous role as MAS Chair, he had cautioned Singapore-based users about the high volatility and risk associated with crypto assets in 2021.