SINGAPORE Law and Practice Contributed by: Tju Liang Chua and Ulanda Oon, Drew & Napier LLC
tal Markets Products and the FAQs on the Payment Services Act (PS Act), it has also implemented robust retail investor protection measures, including restric- tions on the marketing of DPT services to the gen- eral public and a prohibition on facilitating the staking and lending of retail customers’ assets by PS Act- regulated licensees. Furthermore, entities regulated under the SFA, PS Act and FSMA remain subject to MAS guidelines on outsourcing and technology risk management. MAS expects, among other things, such regulated entities to conduct due diligence on the service provider and ensure that certain terms, such as the scope of the outsourcing arrangement, performance, operational, internal control and risk management standards, be included in the outsourc- ing agreement. Data protection obligations are set out in the Personal Data Protection Act (PDPA), which applies irrespective of the technology used to process personal data (PD). Firms deploying blockchain solutions must therefore ensure compliance with the PDPA’s requirements regarding the collection, use, disclosure and storage of PD. Singapore’s data protection regime under the PDPA does not include a general “right to be forgotten” equivalent to that found under the EU’s General Data Protection Regulation. However, the PDPA does impose obligations on organisations to cease retain- ing PD when it is no longer necessary for any busi- ness or legal purpose, and to ensure the accuracy of PD used to make decisions affecting individuals. Blockchain’s immutable nature presents challenges in meeting these obligations, and organisations using blockchain-based products should carefully consider how PD is recorded on-chain, and explore storing PD off-chain and referencing it only through hashed or The enforceability of smart contracts in Singapore has not been definitively judicially or legislatively deter- mined. However, the reasoning in the Quoine case (see 1.2.1 Property Considerations ) implies that an agreement encoded by way of a smart contract can be legally enforceable, provided that the typical ele- anonymised identifiers. 1.1.4 Smart Contracts
ments for constituting a binding contract are present, namely: • offer; • acceptance; • consideration; and • the intention to create legal relations. This approach is supported by the IMDA. In its Con- sultation Paper on the Review of the Electronic Trans- actions Act (ETA), the IMDA affirmed that the ETA does not prevent the use and formation of legal contracts embodied in smart contracts and that a contract by sole virtue of its automatic formation is unlikely to be denied validity or enforceability. The IMDA also noted that, depending on their specific technical implemen- tation, cryptographic hashes may, at the very least, constitute possible components of electronic signa- tures for the purposes of party intention and authen- tication to create a contract. Apart from satisfying the general elements of contrac- tual validity, certain contracts are subject to additional statutory formalities. For example, Section 6 of the Civil Law Act mandates that contracts for the sale of immovable property must be in “writing” and signed to be enforceable. Fulfilling the “writing” requirement may be challenging for a smart contract involving the sale of immovable property, making its enforceability uncertain. Meanwhile, the question of whether smart contracts may fulfil the “writing” requirement pursuant to Sec- tion 7 of the ETA remains open to judicial determi- nation. That provision provides that an “electronic record” will constitute “writing”. The ETA defines an “electronic record” as “a record generated, commu- nicated, received or stored by electronic means in an information system or for transmission from one information system to another”. To date, the Singa- pore courts have only discussed the ETA in relation to the validity of contracts formed via email or inter- net transactions. Whether the definition of “electronic records” under the ETA extends to smart contracts remains unclear.
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