Singapore's central bank, the Monetary Authority of Singapore (MAS), has taken a stringent stance on cryptocurrency licensing, with more than 100 out of approximately 170 applications for digital payment token service licenses either rejected or withdrawn.
License Statistics and Current Landscape
According to a report by Nikkei Asia, only three companies are currently listed as licensed entities on the MAS website as of December 2021: DBS Vickers Securities (a unit of DBS Group Holdings, Southeast Asia's largest bank), FOMO Pay (a digital payments startup), and Australia-based Independent Reserve. Firms that were already operating in Singapore before the licensing regime was introduced were granted temporary exemptions while their applications were processed. Senior Minister Tharman Shanmugaratnam told parliament in July that 90 companies were operating under such exemptions.
MAS Justifies Tough Regulation
A spokesperson for MAS told the media: "Cryptocurrencies could be abused for money laundering, terrorism financing, or proliferation financing due to the speed and cross-border nature of the transactions." The spokesperson elaborated: "Digital payment token service providers in Singapore … have to comply with requirements to mitigate such risks, including the need to carry out proper customer due diligence, conduct regular account reviews, and monitor and report suspicious transactions." This strict approach contrasts with Singapore's ambition to become a global crypto hub, which MAS reaffirmed in November 2021, but with a strong emphasis on compliance and security.
Case Study: Binance's Exit
In September 2021, MAS ordered Binance to cease providing crypto services to residents of Singapore. Subsequently, Binance announced the shutdown of its Singapore platform. Binance CEO Changpeng Zhao claimed the closure was due to an 18% stake in Hg Exchange (HGX), a regulated securities exchange. However, Bloomberg reported that the real reason was Binance's inability to meet the licensing requirements. This incident underscores the uncompromising nature of Singapore's regulatory environment.
Impact and Outlook
Despite the high entry barrier, DBS's head of capital markets and chairperson of the bank's crypto exchange stated in September: "We are growing very rapidly. Investors are gradually exploring cryptocurrencies and digital assets." This indicates that compliant platforms can still thrive. As global regulators tighten oversight, Singapore's approach may serve as a model for other jurisdictions. For crypto firms seeking access to the Asian market, meeting MAS's rigorous compliance standards is becoming a prerequisite.