Crypto License in Singapore

General information about the Singapore cryptocurrency license

The crypto framework in Singapore is part of the Payment Services Providers licensing. The license allowing a company to offer cryptocurrency-related services is first and foremost a payment services license.

Getting licensed as a payment institution, a Singaporean legal entity can register for different activities, one of which is specifically directed towards crypto.

Payment institutions, including crypto related, are licensed and supervised by the Monetary Authority of Singapore (MAS), which is the central bank of the country. In 2019, the MAS issued the currently enforced Payment Services Act. This legal text specifies the rules to be and stay licensed, as well as what it permits or does not permit.

Thanks to a high level of proficiency in finance and IT, Singapore benefits from highly skilled workers and a dynamic, innovative environment. In the case of crypto, we can note such initiatives such as the Association of Crypto Currency Enterprises and Start-ups Singapore (ACCESS), who notably worked on interVASP messaging, a system aimed at facilitating the implementation of the Travel Rule between digital assets service providers.

With one of the strongest reputations in the world and a nationwide focus on transparency and trust, the Singapore crypto license is consequently subject to high requirements. Among other things we shall note a minimum authorized capital of about 100,000 SGD (about 73,000 USD) and one of the strongest AML-KYC legal frameworks.

Singapore currently does not recognize crypto as legal tender, but as an alternative means of payment.

Advantages of Singapore Crypto License

Registering for cryptocurrency activities under a Singapore Payment Services license presents virtual assets services providers with a massive advantage in terms of trustworthiness and reputation. Singapore is arguably the major financial place of the Asian continent, disputing this title with Hong Kong, and has proven for decades that it was a very fertile business environment.

A crypto license in Singapore also opens the doors to a wide range of business lines. As the cryptocurrency framework is integrated into a wider FinTech license, the Singaporean cryptocurrency exchange license can work in symbiosis with an authorization for banking activities, remittance, loans or multiple other financial services. This leads to high potential structures with the ever-existing possibility to extend their activities.

In summary, a Singapore crypto license is notoriously advantageous for ambitious projects willing not just to offer virtual asset services, but build an innovative and competitive FinTech company, who would work with crypto as part of its operations. Singapore would then allow for an efficient single framework and provide its licensee with a major reputational advantage.

Singapore VASP License: Process and Duration

The Payment Institution license with registration for crypto activities in Singapore is a high-level license, whose timeline can raise above 6 months for licensing only. The process is nonetheless straightforward, thanks to clear guidelines emitted by the regulatory body.

Obtaining a VASP license in Singapore begins with incorporating a company in the country. This company should have domestic substance in the form of an office space and personnel, with at least 1 executive director having to be either a Singapore citizen or resident.

A “suitably qualified compliance officer at the management level” shall be appointed to perform compliance duties pertaining to money laundering and terrorism financing. On the same level, the company should produce and enforce policies and procedures pertaining to AML-CFT, to data protection and cybersecurity, and to risk management and customer due diligence (“KYC/KYB”).

A crypto licensed company will be required to open a corporate account in a bank in Singapore.

The different types of crypto licenses in Singapore

The Payment Service Provider framework in Singapore is divided into two licenses, whose difference is based on the size of the operation and not on its nature.

The Payment Services Act of 2019 distinguishes a “Standard Payment Institution” (SPI) from a “Major Payment Institution” (MPI). The differences are mainly about numbers: requirements, thresholds for operation, etc.

In both cases, a Singapore Payment Institution willing to engage in cryptocurrency business must register for Activity F: “Digital Payment Token Service”.

This is one of 7 possible activities from the following list:

• Activity A: account issuance service;
• Activity B: Domestic money transfer service;
• Activity C: Cross-border money transfer service;
• Activity D: Merchant acquisition service;
• Activity E: E-money issuance service (electronic money is NOT cryptocurrency!);
• Activity F: Digital payment token service;
• Activity G: Money-changing service.

Difference between a Standard Payment Institution and a Major Payment Institution in Singapore

We can list as examples of what qualifies a company as an MPI instead of an SPI:

• The volume of all transactions of one registered activities exceeds 3M SGD, or the volume of all transactions of the company exceeds 6M SGD;
• The issued “electronic money” (not crypto, but fiat equivalent on a platform does qualify as such) exceeds 5M SGD.

If a company shall requalify from SPI to MPI, it will be obliged to raise its share capital, its safety deposit, and to reinforce its team consequently.

Issuing security tokens as a licensed Singapore crypto company

As a payment institution, a Singapore licensed crypto exchange can also apply for a Securities and Futures License, giving it the possibility to issue security tokens and other types of crypto derivatives.

Getting this license is a separate process with its own requirements, laid out in the Securities and Futures (Licensing and Conduct of Business) Regulations of 2004, lastly amended in 2023.

The legality of cryptocurrency business in Singapore

Singapore has been friendly to digital assets since 2014. It was one of the first countries to speak about crypto and its potential as a disruptive technology. In 2019, the Monetary Authority of Singapore integrated cryptocurrency business into the Payment Services Act law, making it officially legal and recognized.

This integration into the Payment Services Act of 2019 classifies crypto business as a subset of activities within the Payment Service Providers framework.

This framework entails two licenses: the Standard Payment Institution license and the Major Payment Institution license. Both are able to provide not just cryptocurrency related services, but also other payment services.

It is mandatory to have one of these two licenses and to register for cryptocurrency activities in order to legally operate as a virtual assets service provider in Singapore.

Cryptocurrency regulation in Singapore

Cryptocurrency regulation in Singapore are composed of two aspects:

• The business aspect, regulated by the Payment Services Act of 2019;
• The compliance aspect, regulated by laws such as the Corruption, Drug Trafficking, and Other Serious Crimes Act of 1992 (for AML).

The Payment Services Act of 2019 defines the requirements and authorizations regarding Payment Institutions licenses. These licenses can encompass cryptocurrency activities, if the company registers for it during its application.

On the compliance aspect of cryptocurrency businesses, the Monetary Authority of Singapore (MAS) has issued guidelines and notices. These documents, shorter than law texts, makes it simpler for compliance teams of payment institutions and crypto companies to not make their own interpretations of the laws in force. With this proactive approach to regulating, the MAS facilitates understanding and therefore compliance with the rules.

Singapore Virtual Cryptocurrency Registry

The Registry of the MAS includes all the virtual cryptocurrency companies. The register is fully online and discloses information about the crypto companies based in Singapore.

The register segregates the Standard Payment Institutions from the Major Payment Institutions, the two types of licenses that allows a company to provide cryptocurrency related services.

By selecting the activity “Digital Payment Token Service”, we can see the list of all licensed companies in Singapore. The register lists the key personnel, office address and contact details of the licensed entity.

Crypto-authorization process in Singapore

The crypto-authorization process in Singapore is one of the roughest there is. The small Southeast Asian country holds tight to its reputation as a high trust financial center. Consequently, it sets high standards and expectations from crypto companies willing to operate from Singapore.

The registration of a Singapore company as a crypto currency company

Registering a company in Singapore is simple, thanks to business-friendly regulations and an effective administration. However, when it comes to entering the register of crypto currency companies, the requirements and obligations are different. Knowing and complying with the rules, in order to set up the company in a way that makes it possible to obtain a crypto license, requires much more than a simple incorporation.

Among other things, we shall list the opening of a local office with local personnel, the financial requirements set by the regulatory authorities, the AML-KYC documentation as well as risk assessments and cybersecurity policies, etc.

Governmental Statements on Crypto in Singapore

In the very early year of 2014, Singaporean governmental institutions were already discussing cryptocurrency. The subject was still far from being heard about from most people and the majority of countries didn’t even pay attention.

For starters, the Monetary Authority of Singapore stated that “it wouldn’t interfere with Bitcoin”. While some other countries tried to regulate or even ban crypto, Singapore took the pragmatic approach of an observer.

Though the MAS warned investors on the dangers of cryptocurrency trading, it did not start working on a regulation before it had an understanding of how cryptocurrency business models work. This is how Singapore published an already mature framework in 2019, that is still standing as of today.

In 2014 as well, the Inland Revenue Authority of Singapore issued guidance on taxable events pertaining to Bitcoin trading and transactions. At this time, there was virtually no regulatory basis for crypto of any kind. As such, Singapore was a pioneer in declaring that cryptocurrency trading gains should be taxed the same as capital gains.

Requirements for companies engaged in crypto activities in Singapore

The Monetary Authority of Singapore (MAS) has set strong admissions criteria for companies willing to engage in crypto activities. Three different kinds of requirements apply:

• Requirements pertaining to the founders of the company;
• Requirements pertaining to the corporate level and business model;
• Requirements pertaining to compliance and lawfulness.

The company shall be governed and owned by competent, fit and proper individuals. This is assessed by a background check, where the participants must demonstrate that they are suitable for managing a crypto company. Note that the assessment is partially subjective.

To apply for a crypto license in Singapore, a company must necessarily be registered in Singapore. The company shall be operating from a local office where the books and records are held. The company must register an authorized capital of minimum 100,000 SGD (250,000 SGD in the case of a Major Payment Institution). It shall also prepare a security cash deposit of 100.000 SGD as well (200,000 SGD in the case of a Major Payment Institution).

The MAS will also pay critical attention to the compliance arrangements and measures set in place by the company to ensure enforcement of the Singaporean laws and regulations. Additionally, the risk management (including cybersecurity aspects) and how the required audit function will be performed in the future will be looked into.

Note that if the Singaporean entity is set as a daughter company of a group or another legal entity, the mother company shall prepare a Letter of Responsibility explaining how the Singapore crypto company integrates into the group structure.

The process of setting up a company for a cryptocurrency business in Singapore

The Payment Institution license, that gives the right to operate a cryptocurrency business in Singapore, can only be obtained for a Singapore company.

The preferred company form to get the crypto license in Singapore is the limited liability company. The incorporation itself is a straightforward, simple process that can be done remotely. The applicant provides documents from its UBOs and mother company if applicable, and the company is set up in 1-2 business weeks.

However, to apply for a Payment Institution license and a crypto authorization, a Singaporean limited company needs to set up economic substance within Singapore.

This means renting an actual office space, hiring domestic employees (at least 3 people) and demonstrating that the project’s implementation in Singapore does make sense for social and economic reasons.

Taxation for cryptocurrency companies in Singapore

There is no taxation specifically directed towards cryptocurrency in Singapore.

For cryptocurrency companies, corporate income tax applies. In Singapore, a flat rate of 17% applies. This rate can however be decreased by tax exemption schemes for new start up companies, on their first 3 years of operations.

With this scheme, corporate income tax only applies on 75% of the first 100,000 SGD of taxable revenue and 50% of the following 100,000 SGD. Further tax exemptions are possible upon application to the Inland Revenue Authority of Singapore (IRAS).

Obligations for crypto companies in Singapore

Licensed crypto companies in Singapore must follow a set of ongoing obligations. The regulator takes a proactive stance, by providing licensed companies with detailed guidelines. These notices and rulebooks are designed to provide VASP companies with a clear overview of what is expected from them in order to maintain the license.

On the legal side, crypto projects are liable to comply with a consequent set of guidelines emitted by the Monetary Authority of Singapore:

• Notices on Prevention of Money Laundering and Countering the Financing of Terrorism;
• Notice on Reporting of Suspicious Activities & Incidents of Fraud;
• Notice on Submission of Regulatory Returns;
• Notice on Cyber Hygiene;
• Notice on Business Conduct;
• Notice on Disclosures and Communications;
• Guidelines on Technology Management;
• E-payments user protection guidelines.

On the corporate side, crypto payment institutions of Singapore should comply with the annual audit requirements. The auditor’s reports shall “provide clarity on the submission of the annual balance sheet and profit and loss account, the financial statements or the consolidated financial statements (as the case may be) of the licensee.”

Sanctions for violating Singapore crypto-business obligations

Singapore is a country famous for being very strict on the enforcement of its laws and regulations. A famous example being that spitting out chewing gum on the streets leads you to the police station.

A Singaporean company that would wrongfully provide cryptocurrency services, or breach the law in doing so legally, exposes itself to consequent fines and penalties.

Individuals recognized as the culprit of wrongdoings within a firm can be imprisoned up to 3 years and fined up to 125,000 SGD.