SINGAPORE Law and Practice Contributed by: Tju Liang Chua and Ulanda Oon, Drew & Napier LLC
As mentioned in 1.1.1 Evolution of Uses of Block- chain , the MAS has implemented several measures to enhance retail investor protection and business conduct requirements that are applicable to DPT- SPs regulated under the PS Act. These measures are aimed at addressing concerns that retail customers may not have the financial means to withstand the large losses that could arise from speculative trading of DPTs and alleviate the information disparity that these retail customers may have vis-à-vis DPTSPs. The new regulatory measures applicable to licensed and exempt DPTSPs include: • segregation of customers’ assets and safeguarding customers’ monies; • adopting risk management controls; • prohibiting the facilitation of staking and lending of retail customers’ assets; • application of consumer access measures to retail customers (whether resident in Singapore or other- wise), which include undertaking a risk awareness assessment; • the requirement that DPTSPs publicly disclose their listing and governance policies for tokens listed and offered on their platforms; • establishing complaints handling policies and pro- cedures applicable to retail customers; and • the implementation of effective and swift recovery strategy for “critical systems”. Where the use of digital assets involves prediction markets, or the NFT minting introduces a game of chance element, questions may arise as to whether such activities fall within the regulatory perimeter of the Gambling Control Act and the supervisory remit of the GRA. Relevant stakeholders should be mindful that the characterisation of an activity as “gambling” under Singapore law does not turn solely on its label, but on the substance of the arrangement and whether it exhibits the hallmarks of betting, gaming or lottery activity. 2.3 Regulated Firms and Legal Wrappers As mentioned in 2.2 Crypto-Asset Regulatory Frame- works , Singapore adopts an activity-based regulatory approach to digital assets. Accordingly, where a fund (rather than individual investors) carries out the rel-
• individuals and partnerships that provide DT ser- vices outside of Singapore, from a place of busi- ness in Singapore; and • Singapore-incorporated companies that provide DT services outside of Singapore, from a place of business anywhere in the world. The MAS has also clarified that where an individual is an employee of a foreign-incorporated company that provides DT services outside Singapore, work done by such individual as part of his employment would not in itself attract a licensing requirement under the FSMA. DTs comprise DPTs and digital representations of CMPs. If the token does not fall within the definition of a DT, then the services provided in respect of the token do not fall within FSMA’s remit. The FSMA aims to broaden the scope and regulatory burden of the AML/CFT requirements for service pro- viders that provide the following services: • dealing in DTs; • facilitating the exchange of DTs where the service provider comes into possession of monies or DTs involved; • facilitating the exchange of DTs where the service provider does not come into possession of the monies or DTs involved; • facilitating the transmission of DTs from one account to another; • custodial services for DTs; and • advisory services relating to the offer or sale of DTs. Services provided by any technical service provider that support the provision of a DT service, and do not enter into possession of any money or DT under that DT service, are also carved out from the remit of the FSMA. To ensure that there is supervisory oversight, appli- cants for a FSMA licence must have a permanent place of business in Singapore, and the FSMA impos- es controls on changes of ownership and leadership of licensees.
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