SINGAPORE Law and Practice Contributed by: Kenneth Pereire and Lin YingXin, KGP Legal LLC
Peer-to-Peer (P2P) Trading Platforms • Example – Funding Societies. • Regulatory regime – P2P trading platforms facilitate direct transactions between buy - ers and sellers without the involvement of traditional intermediaries. They are regulated by MAS under the SFA if they offer securities and FAA if they provide financial advice. MAS imposes licensing requirements, conduct standards and disclosure obligations on P2P trading platforms to safeguard investor inter - ests, ensure market integrity, and mitigate risks associated with peer-to-peer lending. Digital Asset Exchanges • Examples – Gemini, Coinhako, Kraken. • Regulatory regime – cryptocurrency exchang - es facilitate the trading of digital assets such as Bitcoin and Ethereum. They are regulated by MAS under the PSA if they facilitate the exchange of digital payment tokens. Such cryptocurrency exchanges are required to obtain a licence from MAS to operate legally in Singapore. The PSA imposes stringent requirements on regulated cryptocurrency exchanges, including AML/CTF measures, customer due diligence, and cybersecurity standards. 6.2 Regulation of Different Asset Classes In Singapore, different asset classes are regu - lated under the MAS framework, which includes AML/CFT rules to ensure financial system integ - rity. Asset classes are subject to tailored regulato - ry regimes. Capital markets products, such as shares and debentures, are regulated under the SFA, depending on the activity and applicable exemptions. Digital payment tokens (cryptocur - rencies) and e-money are regulated under the PSA, depending on the activity conducted.
Key differences include: • cryptocurrencies are primarily governed by the PSA, focusing on payment services and AML/CFT compliance; and • security tokens are treated as securities and regulated under the SFA, with stricter investor protection and disclosure requirements. 6.3 Impact of the Emergence of Cryptocurrency Exchanges Regulatory Response to Cryptocurrency Exchanges The emergence of cryptocurrency exchanges, both centralised and decentralised, has prompt - ed Singaporean regulators to adopt compre - hensive frameworks, including the extension of AML/CFT regulations. Cryptocurrency exchang - es may be regulated under the PSA, which requires them to obtain a licence if they facilitate the exchange of digital payment tokens. These exchanges must comply with stringent require - ments, including submitting Suspicious Activity Reports (SARs) to the MAS and implementing strict CDD procedures. This regulatory approach reflects Singapore’s commitment to innovation while combating financial crimes, marking a sig - nificant advancement in response to the growing cryptocurrency market. Balancing Innovation and Security Singapore aims to balance promoting innova - tion in the cryptocurrency sector with maintain - ing the integrity and security of the financial system. The PSA underscores the importance of transparency, accountability and regulatory co-operation, which strengthens the resilience of Singapore’s cryptocurrency ecosystem. This regulatory framework applies equally to central - ised exchanges, which operate through a central authority, and decentralised exchanges, where trading occurs directly between users without an
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