SINGAPORE Law and Practice Contributed by: Kenneth Pereire and Lin YingXin, KGP Legal LLC
Approach to Regulation of Sandbox Companies
products through MAS’s regulatory sandbox with relaxed requirements, unlike banks, which must adhere to full regulatory compliance. 2.5 Regulatory Sandbox Singapore’s Regulatory Sandbox Singapore has a regulatory sandbox, which is operated by the MAS, known as the MAS Fin - Tech Regulatory Sandbox. This framework pro - vides a controlled environment for testing inno - vative financial products, services and business models. This allows nascent fintech endeavours space to develop within a supervised environ - ment. How the Sandbox Works Under the regulatory sandbox, companies, including start-ups and existing financial insti - tutions, can apply to test their innovations in a live production environment. During this testing phase, certain regulatory requirements may be relaxed to facilitate experimentation, while still ensuring consumer protection and financial sta - bility. Examples of legal and regulatory require - ments that MAS is prepared to consider relaxing for the duration of the sandbox include, but are not limited to: (i) asset maintenance require - ments; (ii) fund solvency; (iii) capital adequacy requirements; (iv) board composition; and (v) financial soundness. Who May Apply The sandbox is open to a wide range of entities involved in the financial sector, including fintech start-ups, established financial institutions, tech - nology companies and other innovators. MAS assesses each application based on its merits, considering factors such as the potential ben - efits to consumers, the novelty of the innovation and the applicant’s ability to manage associated risks effectively.
MAS maintains oversight throughout the testing phase to monitor the progress of sandbox partic - ipants and assess any risks that may arise. While certain regulatory requirements may be relaxed during the sandbox period, MAS ensures that adequate safeguards are in place to protect con - sumers and the integrity of the financial system. At the end of the testing period, MAS conducts a review to determine whether to grant regulatory approval for the innovation to be deployed on a broader scale, subject to any necessary adjust - ments or conditions. This approach allows for innovation to flourish while maintaining regula - tory standards and safeguarding the interests of all stakeholders. 2.6 Jurisdiction of Regulators In Singapore, the regulation of the fintech indus - try is managed by several key agencies, each overseeing different aspects of the sector, for instance: • MAS – regulates fintech activities like pay - ments, digital banking and cryptocurrencies under laws such as the PSA and SFA, and runs the FinTech Regulatory Sandbox for innovation and testing; • ACRA – oversees business registration and compliance with the Companies Act, ensuring corporate governance and accurate financial reporting for fintech companies; • CCCS – enforces competition and consumer protection laws to prevent anti-competitive practices and safeguard fair trade in the fin - tech space; • PDPC – regulates personal data under the PDPA, ensuring fintech companies comply with data protection and consumer privacy standards;
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