Published On: Tue, Oct 26th, 2021

Singapore Cryptocurrency License: A Major framework for Major players

Singapore is a city-state located at the tip of the Malay Peninsula. Formerly a poor, rustic fishermen’s village, Singapore became one of the world’s main economic and technological powerhouses in just a few decades. It is now an international financial center and the home of many FinTechs and companies that get crypto currency licenses in Singapore. It is one of the most developed places in the world and one of the least corrupted.

It comes as no surprise that Singapore was an early player in the crypto field. And among the early ones, one of few that was playing the long game and not aiming for publicity and a cash grab. The Merlion city-state kept its usual standards of trustworthiness and high business etiquette with the blockchain industry.

The Singaporean framework is certainly the most trusted blockchain license. Singapore actually took a very sensed and different approach than most jurisdictions: it blended the novelty of cryptocurrencies into its existing FinTech regulations.

Photo/Pete Linforth

Understanding the crypto license in Singapore: Standard and Major Payment Institutions

There is no “cryptocurrency trading license” in Singapore, but Institutions of Payment, which have the ability to develop crypto related services. The Payment Institution framework builds well-rounded FinTechs, enabling them to propose a wide range of financial services: online banking, card issuance, credits, etc.

Yes, you understand it right: if your dream project is an online bank with fiat and crypto services, Singapore allows you to build it. This is the reality of Payment Institutions, divided into Standard Payment Institutions and Major Payment Institutions on the basis of their income. The only difference is that the Major Institutions are more carefully monitored. The Major Institutions are the majority actually, as they are deemed completely trustful by the market participants.

This framework is not one-size-fits-all, however. The applicant has to demonstrate its project and business model to the Monetary Authority of Singapore (MAS). Depending on the company’s activity, the MAS will tailor an agreement as to what is permitted to do or not and what the company shall report, in exchange for the license.

Is the Singapore Payment Institution framework suiting my project?

This is an important question to answer upfront. Setting up a Payment Institution takes a lot of time and requires a consequent budget. Such projects can take a whole year to get kickstarted and may not even get an immediate approval from the regulator. There is careful homework and planning to do beforehand. Naturally, the first thing to do is to talk about the Singapore opportunity to a corporate services provider specialized in the crypto industry.

Singapore is especially interesting if your project integrates an EMI set-up or the provision of fiat payment services. The MAS is very business-oriented. If your project makes sense and has the funding and talent behind it, the Payment Institution framework will enable you to get to the next level.

Obviously, this implies that Singapore’s framework is mostly targeted at ambitious and thoroughly funded enterprises. This is not a lightweight framework and it cannot suit a project that hasn’t matured enough and that hasn’t the human and infrastructural capacities to back it up.

The process to become a licensed Singaporean Payment Institution and deal with cryptocurrency

Once you reach the certitude that the Singaporean framework is the next stage for your project, there are many boxes to tick in order to successfully be granted the status of Payment Institution. These boxes may be ticked in any order before the application process, but still, there is some logic in going step by step.

The applicant is expected to have substance and conduct business in Singapore. This means registering a domestic legal entity, renting or owning a physical space and the most important: hiring citizens and/or residents of the city-state. There is no turnaround to this rule: your team must include people from the country on board.

The second step is getting ready to work and to present your work to the authorities. This means redacting your whitepaper, your technical solutions, your business model, etc, and acting on it immediately. Especially on the risk-side: your compliance policies should be on par with the Singaporean law and already enforced, even before the activity has begun.

Successfully passing the application stage

Since a payment institution is aiming to become an important player in the sphere of financial services, the MAS expects them to have substantial guarantees. So the last stage before application is not just about gathering a certain amount of share capital. You will need, for a Major Payment Institution license, to get an agreement and a signed letter from a bank that attests that your customers are safeguarded in case of any issue.

This is why the human factor is determinant: your team shall convince not only the regulatory bodies, but banking and insurance agencies as well. Once you are all set, however, you are definitely ready for the application stage and the interview with the MAS. The application leads to licensing, which leads to hitting the market. Congratulations!

Author: Trycia Marks

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