However, Bitcoin and other cryptocurrencies or „virtual assets“ are not legal tender. In 2019, Singapore`s International Commercial Court set a precedent by ruling that cryptocurrency has „basic characteristics of intangible assets“ that can be held in trust or by custody. From this decision alone, it is clear that the legality of owning Bitcoin and other cryptoassets for Singaporean individuals and businesses will certainly no longer be questioned. In 2019, Singapore passed the Payment Services Act (PSA), which aimed to clarify the legal status of cryptocurrencies or „digital payment tokens“ and how they should be regulated. For companies that trade cryptocurrencies, the retail custody offer and a number of other activities, the application of appropriate KYC (Know-Your-Customer), AML (Anti-Money Laundering) and CFT (Counter-Terrorist Financing) audits are required by law. Before conducting cryptocurrency-related activities in Singapore, you should seek legal advice from a Singapore law firm to determine if and how these activities are regulated by Singapore law. The sandbox for each participant would have specified limits and duration. There would be safeguards to protect against the effects of failure on the entire financial system. The specific legal and regulatory requirements, as defined by the DSS, will be relaxed for the participant as long as the sandbox is in force. After leaving the sandbox, the participant should then ensure that the full scope of their legal and regulatory requirements is fully met. MaS highlighted in the Fintech Regulatory Sandbox Guidelines published in November 2016 that some examples of legal and regulatory requirements it is prepared to relax for the purposes of sandboxing, asset maintenance, board composition, cash balances, solvency, financial strength, fund solvency and capital adequacy, royalties, management experience, MAS guidelines for technology risk management and outsourcing, other MAS policies, minimum cash and cash equivalents, minimum paid-up capital, relative size, reputation and background. The DSS also pointed out that some examples of legal and regulatory requirements it intends to maintain are the confidentiality of client information, eligibility criteria, including in terms of honesty and integrity, the handling of clients` funds and assets by intermediaries, as well as the prevention of money laundering and the fight against the financing of terrorism.
A person regulated and authorized under the SFA or PSA („Licensee“) must generally identify the Customer, as well as the legal form, constitution and powers governing and binding the legal entity or legal arrangement, and understand the nature of the Customer`s business and its ownership and control structure. Licensee shall verify the identity of the customer using reliable and independent data, documents or source information. If the Customer is a legal person or legal organization, the Licensee must verify the legal form, proof of existence, constitution and powers that govern and bind the Customer to reliable and independent data, documents or information from a reliable and independent source. MAS`s generally flexible approach to regulating cryptocurrency exchanges has led to the application of existing legal frameworks to the extent possible. In January 2018, MAS issued a press release warning the public of the risks of speculation on cryptocurrencies, while Deputy Prime Minister Tharman Shanmugaratnam said that cryptocurrencies are subject to the same AML and CFT measures as traditional fiat currencies. A year later, the Payment Services Act of 2019 (PSA) was passed, which places exchanges and other cryptocurrency companies under the regulatory authority of MAS from January 2020 and requires them to obtain a MAS operating license. While cryptocurrency is legal in Singapore and regulations regarding Bitcoin and other digital payment tokens are comprehensive and open to innovation, the AML and CFT laws for cryptocurrencies in Singapore are strict. In addition to resolving regulatory issues, people who issue or sell cryptocurrencies in Singapore need strong legal documentation under Singapore law to govern transactions and establish rights and obligations between sellers/issuers and buyers.