SINGAPORE Law and Practice Contributed by: Kenneth Pereire and Lin YingXin, KGP Legal LLC
are also a focal point, with robust cybersecurity prac - tices to safeguard sensitive financial data, required under MAS’ Technology Risk Management guide - lines for financial institutions. Financial institutions must adhere to the MAS Guidelines on Outsourcing in implementing adequate risk management practices. 10. Blockchain 10.1 Use of Blockchain in the Financial Services Industry Traditional players in Singapore’s financial services sector are actively embracing blockchain technology to modernise and streamline operations. Some institu - tions have already implemented blockchain solutions for cross-border payments, trade finance and digi - tal identity verification, aiming to enhance efficiency and reduce costs. Collaborations between traditional financial players and blockchain start-ups are also on the rise, fostering joint ventures and consortia focused on developing innovative blockchain applications tai - lored to Singapore’s financial landscape. These part - nerships underscore a collective effort to leverage blockchain’s potential for transformative change in the industry. For example, MAS has partnered with participants in the industry to conduct a collaborative project, “Project Ubin”, to explore the use of blockchain and distributed ledger technology for the clearing and set - tlement of payments and securities. The payments network prototype that was developed through this project would facilitate the development of a cross- border payments infrastructure, as well as customer applications. 10.2 Local Regulators’ Approach to Blockchain Consultation Papers and Amendments MAS actively engages stakeholders through consul - tation papers to refine regulations on blockchain and digital token activities. A notable example is the 2023 consultation on amendments to the Payment Services Regulations 2019, proposing safeguards like statutory trusts for customer assets and restrictions on retail token lending and staking. By 2025, MAS expanded these measures to cover more complex blockchain
applications, ensuring consumer protection and mar - ket stability. Expansion of Regulatory Scope and Collaborative Initiatives Under the FSMA 2022, MAS targets overseas digi - tal token providers servicing Singapore to mitigate cross-border risks. Enhanced AML/CFT measures and stricter compliance requirements reflect MAS’ proactive regulatory stance. Collaborative efforts through the Singapore Blockchain Innovation Pro - gramme (SBIP) now focus on interoperability, DeFi governance and sustainable blockchain development. These initiatives reinforce Singapore’s position as a blockchain innovation hub while safeguarding market integrity and consumer trust. 10.3 Classification of Blockchain Assets In Singapore, the regulation of blockchain assets depends on their characteristics, with MAS applying Cryptocurrencies such as Bitcoin and Ethereum are not regulated as assets per se, but activities relating to digital payment tokens are regulated under the PSA. Entities providing digital payment token services, such as operating exchanges or providing custody services, must be licensed and comply with AML and customer protection requirements. Following the introduction of the FSMA 2022, Singa - pore-incorporated entities that provide digital token services to customers outside Singapore may be sub - ject to regulation under the digital token service pro - vider framework. Such services may include activities such as digital token custody, dealing or exchange services provided to non-Singapore customers. The regime ensures that Singapore’s regulatory oversight extends to all digital asset activities conducted by Singapore entities, regardless of customer location. Securities Tokens Tokens representing ownership in assets like stocks or bonds are regulated under the SFA. Issuers must meet prospectus requirements and intermediaries require capital markets services licences. different frameworks to each type. Digital Payment Tokens (DPTs)
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