Singapore has persistently positioned itself as a
forward-thinking jurisdiction, balancing innovation with sturdy regulatory
oversight. As a fellow Singaporean, I’m very pleased with its future planning.
The Financial Authority of Singapore (MAS) is searching for submissions for the Session Paper on the proposed regulatory method for
Digital Token Service Suppliers (DTSPs) beneath the Monetary Companies and
Markets Act 2022.
As a substitute of replying to the submission straight, I’ll
attempt to share my standpoint overtly right here, providing insights, potential plans,
and timelines for implementation. Earlier than I begin, I’m sharing this in my
private capability: I don’t symbolize any self-claimed digital property knowledgeable
teams, associations, or colleges.
License Utility and Payment
Constructions
Within the first half of 2024, Singapore’s fintech market
noticed its cryptocurrency and blockchain sectors obtain US$211.90 million throughout
72 offers, marking a 22% improve from US$166.30 million over 38 offers in
the second half of 2023.
Singapore has been actively engaged on strengthening
danger administration frameworks for digital asset tokenization and has not too long ago
launched an initiative to broaden asset tokenization inside monetary providers.
MAS right this moment printed enterprise conduct and shopper entry measures for Digital Cost Token providers in Singapore to restrict potential shopper hurt. They are going to be carried out by way of laws and pointers, which is able to take impact in phases from mid-2024. https://t.co/laevvAlW0a pic.twitter.com/kxBLRQG0az
— MAS (@MAS_sg) November 23, 2023
The proposed license software processes and payment
constructions are essential parts that may form the DTSP panorama in
Singapore. From my perspective, MAS ought to think about implementing a tiered
method to each timelines and costs, reflecting the variety of DTSPs in phrases
of measurement, complexity, and danger profile.
For timelines, I suggest a three-tier system:
Quick-track
(60 days): For small, low-risk DTSPs with simple enterprise fashions.
Customary
(90 days): For medium-sized DTSPs or these with reasonably advanced operations.
Prolonged
(120+ days): For big, advanced DTSPs or these proposing novel enterprise fashions.
This tiered method would permit MAS to allocate
sources effectively whereas guaranteeing thorough vetting of extra advanced
functions. The payment constructions can observe an identical tiered system primarily based on
the DTSP’s annual income or transaction quantity could possibly be carried out.
Singapore expands laws for digital cost token service suppliers https://t.co/xbJBsBSjHz
— The Register (@TheRegister) April 3, 2024
Minimal Monetary Necessities
The proposed minimal monetary necessities are a
important safeguard in opposition to potential market disruptions and shopper losses.
Primarily based on my evaluation, I consider a risk-based method to setting these
necessities is extra possible. This might contain:
Base
Capital Requirement: A minimal base capital for all DTSPs, no matter measurement
or providers provided.
Danger-Weighted
Capital Requirement: Extra capital necessities primarily based on the DTSP’s sorts of providers provided, transaction volumes, and danger profile.
Liquidity
Requirement: A minimal liquidity ratio to make sure DTSPs can meet short-term
obligations.
📣 #ESMA is searching for enter on Liquidity Administration Instruments for funds beneath the revised AIFMD and the #UCITS Directive.
🗓️ Ship your enter by 8 Octoberhttps://t.co/LxNEEX7i2O pic.twitter.com/6G2K4CVVim
— ESMA – EU Securities Markets Regulator 🇪🇺 (@ESMAComms) July 8, 2024
Particularly, suppliers with capital
ratios above 15% had been 30% much less more likely to face operational disruptions throughout
durations of utmost market stress. I suggest that MAS think about setting the bottom
capital requirement at SGD 250,000, with extra risk-weighted necessities
that would improve this quantity as much as SGD 5 million for the most important and most
advanced DTSPs.
Audit
Necessities
The proposed duties of CEOs, administrators, and companions,
together with audit necessities, are basic to making sure good governance and
accountability within the DTSP sector. The next enhancement is beneficial for
consideration:
Necessary
Coaching: Annual coaching packages for CEOs and administrators on regulatory
compliance, danger administration, and rising traits in digital property.
Danger
Committee: DTSPs above a sure measurement should set up a devoted
danger committee on the board stage.
Impartial
Administrators: Mandating a minimal variety of unbiased administrators primarily based on the
DTSP’s measurement and complexity.
Audit
Frequency: Annual exterior audits for all DTSPs, with extra quarterly
inside audits for bigger suppliers.
Monetary markets are shifting in direction of asset tokenization, revolutionizing asset administration and funding.#Chainlink emphasizes interoperability and knowledge integration, echoing #TokenFi’s imaginative and prescient of a future the place tokenized property reshape finance.
📰👇https://t.co/87Qp3ufa3X pic.twitter.com/BGSfD8E2ss
— TokenFi (@tokenfi) April 26, 2024
Regulators are more and more leveraging technological options to
improve their supervisory features and handle huge quantities of information.
Consequently, corporations should interact extra often with regulators concerning
fintech and regtech developments.
Fintech firms that implement sturdy governance
constructions and conduct common audits are certainly much less more likely to expertise
compliance breaches.
AML/CFT Measures
The measures proposed in components 5–8 of the session
paper, notably these associated to Anti-Cash Laundering (AML) and Countering
the Financing of Terrorism (CFT), are essential for sustaining the integrity of
Singapore’s monetary system. I suggest the next enhancements:
Danger-Primarily based
Strategy: Implement a tiered KYC/AML method primarily based on transaction volumes and
danger profiles.
Know-how
Integration: Encourage using AI and machine studying for transaction
monitoring and suspicious exercise detection.
Regulatory
Know-how (RegTech) Sandbox: Set up a sandbox setting for DTSPs to check
modern compliance options.
For current prospects onboarded previous to licensing, I
recommend a phased method:
Part 1
(0–6 months): Danger evaluation of current buyer base
Part 2
(6–12 months): Enhanced due diligence for high-risk prospects
Part 3
(12–18 months): Full compliance with new necessities for all prospects
Correspondent Account Companies
The proposed necessities for Correspondent Account
Companies and data sharing for regulation enforcement functions are important
parts of a complete regulatory framework. Maybe the next
would assist:
Standardized
Knowledge Format: Develop a standardized knowledge format for info sharing throughout
the trade.
Blockchain
Analytics: Encourage using blockchain analytics instruments to boost
transaction traceability.
Safe
Info Sharing Platform: Set up a safe, centralized platform for
info sharing between DTSPs and regulation enforcement businesses.
Blockchain analytics instruments have been instrumental in
recovering stolen or illicitly obtained digital property worldwide. They permit regulation
enforcement businesses to hint and establish suspicious cryptocurrency
transactions on the blockchain , resulting in asset restoration efforts.
Know-how Danger Administration
The draft notices FSM-N28 to FSM-N33 cowl important
facets of DTSP operations, together with expertise danger administration, cyber
hygiene, and conduct. Primarily based on my observations, I suggest the next:
Steady
Monitoring: Implement real-time monitoring methods for cyber threats and
operational dangers.
Incident
Response Drills: Mandate common incident response drills and simulations.
Third-Social gathering
Danger Administration: Set up clear pointers for managing dangers related to
third-party service suppliers.
Client
Schooling: Require DTSPs to allocate sources for ongoing shopper schooling
initiatives.
Bitcoin Heist Hits Japanese Trade DMM Bitcoin https://t.co/RPT9Vxhsnf pic.twitter.com/HCXDznWG2o
— CySecurity Information (@EHackerNews) June 6, 2024
Relating to working hours, maybe MAS can think about a
versatile method that permits for twenty-four/7 operations whereas guaranteeing enough danger
administration and buyer assist. This might contain:
Core
working hours (e.g., 9 AM to five PM SGT) with full assist providers
Prolonged
hours with automated methods and on-call assist
Scheduled
upkeep home windows throughout low-volume durations
Timeline for Implementation:
To make sure a clean transition to the brand new regulatory
framework, I suggest the next timeline:
Month
0–3: Publication of ultimate laws and pointers
Month
3–6: Trade session and suggestions interval
Month
6–9: Finalization of technical specs and reporting codecs
Month
9–12: DTSP preparation and system upgrades
Month
12–18: Phased implementation of latest necessities
Month
18–24: Full compliance deadline for all DTSPs
This timeline permits for a gradual implementation,
giving DTSPs adequate time to adapt their methods and processes whereas
guaranteeing that the regulatory framework is absolutely operational inside two years.
With cautious implementation and steady refinement,
this regulatory framework has the potential to cement Singapore’s place as a
international chief in digital asset regulation, attracting modern companies
whereas safeguarding the pursuits of customers and the broader monetary system.
Singapore has persistently positioned itself as a
forward-thinking jurisdiction, balancing innovation with sturdy regulatory
oversight. As a fellow Singaporean, I’m very pleased with its future planning.
The Financial Authority of Singapore (MAS) is searching for submissions for the Session Paper on the proposed regulatory method for
Digital Token Service Suppliers (DTSPs) beneath the Monetary Companies and
Markets Act 2022.
As a substitute of replying to the submission straight, I’ll
attempt to share my standpoint overtly right here, providing insights, potential plans,
and timelines for implementation. Earlier than I begin, I’m sharing this in my
private capability: I don’t symbolize any self-claimed digital property knowledgeable
teams, associations, or colleges.
License Utility and Payment
Constructions
Within the first half of 2024, Singapore’s fintech market
noticed its cryptocurrency and blockchain sectors obtain US$211.90 million throughout
72 offers, marking a 22% improve from US$166.30 million over 38 offers in
the second half of 2023.
Singapore has been actively engaged on strengthening
danger administration frameworks for digital asset tokenization and has not too long ago
launched an initiative to broaden asset tokenization inside monetary providers.
MAS right this moment printed enterprise conduct and shopper entry measures for Digital Cost Token providers in Singapore to restrict potential shopper hurt. They are going to be carried out by way of laws and pointers, which is able to take impact in phases from mid-2024. https://t.co/laevvAlW0a pic.twitter.com/kxBLRQG0az
— MAS (@MAS_sg) November 23, 2023
The proposed license software processes and payment
constructions are essential parts that may form the DTSP panorama in
Singapore. From my perspective, MAS ought to think about implementing a tiered
method to each timelines and costs, reflecting the variety of DTSPs in phrases
of measurement, complexity, and danger profile.
For timelines, I suggest a three-tier system:
Quick-track
(60 days): For small, low-risk DTSPs with simple enterprise fashions.
Customary
(90 days): For medium-sized DTSPs or these with reasonably advanced operations.
Prolonged
(120+ days): For big, advanced DTSPs or these proposing novel enterprise fashions.
This tiered method would permit MAS to allocate
sources effectively whereas guaranteeing thorough vetting of extra advanced
functions. The payment constructions can observe an identical tiered system primarily based on
the DTSP’s annual income or transaction quantity could possibly be carried out.
Singapore expands laws for digital cost token service suppliers https://t.co/xbJBsBSjHz
— The Register (@TheRegister) April 3, 2024
Minimal Monetary Necessities
The proposed minimal monetary necessities are a
important safeguard in opposition to potential market disruptions and shopper losses.
Primarily based on my evaluation, I consider a risk-based method to setting these
necessities is extra possible. This might contain:
Base
Capital Requirement: A minimal base capital for all DTSPs, no matter measurement
or providers provided.
Danger-Weighted
Capital Requirement: Extra capital necessities primarily based on the DTSP’s sorts of providers provided, transaction volumes, and danger profile.
Liquidity
Requirement: A minimal liquidity ratio to make sure DTSPs can meet short-term
obligations.
📣 #ESMA is searching for enter on Liquidity Administration Instruments for funds beneath the revised AIFMD and the #UCITS Directive.
🗓️ Ship your enter by 8 Octoberhttps://t.co/LxNEEX7i2O pic.twitter.com/6G2K4CVVim
— ESMA – EU Securities Markets Regulator 🇪🇺 (@ESMAComms) July 8, 2024
Particularly, suppliers with capital
ratios above 15% had been 30% much less more likely to face operational disruptions throughout
durations of utmost market stress. I suggest that MAS think about setting the bottom
capital requirement at SGD 250,000, with extra risk-weighted necessities
that would improve this quantity as much as SGD 5 million for the most important and most
advanced DTSPs.
Audit
Necessities
The proposed duties of CEOs, administrators, and companions,
together with audit necessities, are basic to making sure good governance and
accountability within the DTSP sector. The next enhancement is beneficial for
consideration:
Necessary
Coaching: Annual coaching packages for CEOs and administrators on regulatory
compliance, danger administration, and rising traits in digital property.
Danger
Committee: DTSPs above a sure measurement should set up a devoted
danger committee on the board stage.
Impartial
Administrators: Mandating a minimal variety of unbiased administrators primarily based on the
DTSP’s measurement and complexity.
Audit
Frequency: Annual exterior audits for all DTSPs, with extra quarterly
inside audits for bigger suppliers.
Monetary markets are shifting in direction of asset tokenization, revolutionizing asset administration and funding.#Chainlink emphasizes interoperability and knowledge integration, echoing #TokenFi’s imaginative and prescient of a future the place tokenized property reshape finance.
📰👇https://t.co/87Qp3ufa3X pic.twitter.com/BGSfD8E2ss
— TokenFi (@tokenfi) April 26, 2024
Regulators are more and more leveraging technological options to
improve their supervisory features and handle huge quantities of information.
Consequently, corporations should interact extra often with regulators concerning
fintech and regtech developments.
Fintech firms that implement sturdy governance
constructions and conduct common audits are certainly much less more likely to expertise
compliance breaches.
AML/CFT Measures
The measures proposed in components 5–8 of the session
paper, notably these associated to Anti-Cash Laundering (AML) and Countering
the Financing of Terrorism (CFT), are essential for sustaining the integrity of
Singapore’s monetary system. I suggest the next enhancements:
Danger-Primarily based
Strategy: Implement a tiered KYC/AML method primarily based on transaction volumes and
danger profiles.
Know-how
Integration: Encourage using AI and machine studying for transaction
monitoring and suspicious exercise detection.
Regulatory
Know-how (RegTech) Sandbox: Set up a sandbox setting for DTSPs to check
modern compliance options.
For current prospects onboarded previous to licensing, I
recommend a phased method:
Part 1
(0–6 months): Danger evaluation of current buyer base
Part 2
(6–12 months): Enhanced due diligence for high-risk prospects
Part 3
(12–18 months): Full compliance with new necessities for all prospects
Correspondent Account Companies
The proposed necessities for Correspondent Account
Companies and data sharing for regulation enforcement functions are important
parts of a complete regulatory framework. Maybe the next
would assist:
Standardized
Knowledge Format: Develop a standardized knowledge format for info sharing throughout
the trade.
Blockchain
Analytics: Encourage using blockchain analytics instruments to boost
transaction traceability.
Safe
Info Sharing Platform: Set up a safe, centralized platform for
info sharing between DTSPs and regulation enforcement businesses.
Blockchain analytics instruments have been instrumental in
recovering stolen or illicitly obtained digital property worldwide. They permit regulation
enforcement businesses to hint and establish suspicious cryptocurrency
transactions on the blockchain , resulting in asset restoration efforts.
Know-how Danger Administration
The draft notices FSM-N28 to FSM-N33 cowl important
facets of DTSP operations, together with expertise danger administration, cyber
hygiene, and conduct. Primarily based on my observations, I suggest the next:
Steady
Monitoring: Implement real-time monitoring methods for cyber threats and
operational dangers.
Incident
Response Drills: Mandate common incident response drills and simulations.
Third-Social gathering
Danger Administration: Set up clear pointers for managing dangers related to
third-party service suppliers.
Client
Schooling: Require DTSPs to allocate sources for ongoing shopper schooling
initiatives.
Bitcoin Heist Hits Japanese Trade DMM Bitcoin https://t.co/RPT9Vxhsnf pic.twitter.com/HCXDznWG2o
— CySecurity Information (@EHackerNews) June 6, 2024
Relating to working hours, maybe MAS can think about a
versatile method that permits for twenty-four/7 operations whereas guaranteeing enough danger
administration and buyer assist. This might contain:
Core
working hours (e.g., 9 AM to five PM SGT) with full assist providers
Prolonged
hours with automated methods and on-call assist
Scheduled
upkeep home windows throughout low-volume durations
Timeline for Implementation:
To make sure a clean transition to the brand new regulatory
framework, I suggest the next timeline:
Month
0–3: Publication of ultimate laws and pointers
Month
3–6: Trade session and suggestions interval
Month
6–9: Finalization of technical specs and reporting codecs
Month
9–12: DTSP preparation and system upgrades
Month
12–18: Phased implementation of latest necessities
Month
18–24: Full compliance deadline for all DTSPs
This timeline permits for a gradual implementation,
giving DTSPs adequate time to adapt their methods and processes whereas
guaranteeing that the regulatory framework is absolutely operational inside two years.
With cautious implementation and steady refinement,
this regulatory framework has the potential to cement Singapore’s place as a
international chief in digital asset regulation, attracting modern companies
whereas safeguarding the pursuits of customers and the broader monetary system.
