MAS consults on proposed regulatory approach, regulations, notices, and guidelines for digital token service providers issued under Financial Services and Markets Act 2022

29 October 2024

On 4 October 2024, the Monetary Authority of Singapore (“MAS”) published a consultation paper seeking feedback on the proposed regulatory approach, regulations, notices, and guidelines for digital token service providers issued under the Financial Services and Markets Act 2022 (“FSMA”). The consultation closes on 4 November 2024.

The FSMA was passed in Parliament on 5 April 2022. Part 9 of the FSMA provides the legislative framework for the regulation of (i) individuals and partnerships who, from a place of business in Singapore, carry on a business of providing a digital token (“DT”) service outside Singapore, and (ii) Singapore corporations that carry on a business, whether from Singapore or elsewhere, of providing a digital token service outside Singapore (collectively, digital token service providers, or “DTSPs”).

To effect the objectives of Part 9 of the FSMA, MAS intends to prescribe or issue the Financial Services and Markets Regulations, notices (including anti-money laundering and countering the financing of terrorism notices) under the FSMA, and guidelines. MAS seeks comments on these regulatory instruments, including matters relating to:

  • the processes and timelines for licence application and lapsing, as well as the fee structures and the quantum of fees proposed;
  • the quantum and components of the minimum financial requirements of DTSPs;
  • the duties of the CEO, directors, and partners of licensees, and audit requirements that apply to licensees;
  • the requirements in relation to existing customers that were onboarded by the licensee prior to obtaining its licence;
  • whether third party reliance is appropriate for the sector;
  • the proposed requirements for correspondent account services;
  • prohibiting licensees from issuing bearer negotiable instruments and restricting cash payouts by licensees;
  • the type of information that accompanies or relates to value transfers that would be relevant for law enforcement purposes, and the type of records that should be kept;
  • the reporting requirements in the notice on reporting of suspicious activities and incidents of fraud and the notice on submission of regulatory returns;
  • the technology risk management and cyber hygiene requirements set out in the notices; and
  • the conduct, disclosure, and communications requirements for licensees in respect of DT services provided outside of Singapore, including those relating to the making of false or misleading statements about the licensee’s scope of regulation.

Reference materials

The consultation paper is available on the MAS website www.mas.gov.sg.