SINGAPORE Law and Practice Contributed by: Kenneth Pereire and Lin YingXin, KGP Legal LLC
and AML/CFT regulations. These requirements ensure investor protection, market stability and effective risk management for funds investing in blockchain assets. 10.11Virtual Currencies In Singapore, virtual currencies and blockchain assets are regulated differently based on their characteristics and use cases. Virtual currencies like bitcoin and ethereum are primarily used for transactions and are regulated under the PSA as digital payment tokens. Providers of related services, such as exchanges, must be licensed under the PSA to ensure consumer protection and payment system integrity. Blockchain assets, including security tokens representing real-world assets like stocks or bonds, are regulated under the SFA as capital market products. These tokens must comply with traditional securities regulations, including disclosure and registration, to protect inves - tors. Utility tokens and NFTs, unless they have investment functions or are part of an investment scheme, are generally not regulated by the PSA or SFA. This distinction reflects Singapore’s approach to ensuring a secure, transparent financial environ - ment while adapting to the evolving digital asset landscape. 10.12Non-Fungible Tokens (NFTs) NFTs and NFT platforms in Singapore may fall under the fintech regulatory perimeter depend - ing on their characteristics. NFTs representing ownership of valuable assets, like tokenised real estate, could be considered financial prod - ucts under the SFA and require a CMS Licence. Platforms that facilitate payment services, such as cryptocurrency or fiat transactions, may be
subject to the PSA and must comply with AML/ CFT regulations. Concerns about investor protection and mar - ket integrity may lead to regulatory intervention, especially for platforms that market NFTs as investment products. Examples include RealT (tokenising real estate) and Play-to-Earn NFT games, which could trigger PSA or SFA com - pliance. However, collectible NFTs for personal enjoyment, without financial features, may not fall under regulation unless they involve financial transactions or asset trading. Open banking is a system where several banks use a common third-party system for the relay - ing of information to its customers. The regula - tions in Singapore support open banking – with the MAS collaborating with the Association of Banks in Singapore to construct non-binding guidelines on developing and adopting open API-based systems, which are crucial for open banking. Moreover, MAS is seen showing active support for Singapore’s transition to open bank - ing by developing APIX, the world’s first cross- border platform for further collaboration within ASEAN itself. 11.2 Concerns Raised by Open Banking In Singapore, the rising prominence of open banking has prompted banks and technology providers to prioritise robust measures for data privacy and security. Guided by MAS regula - tions, these entities are implementing advanced technologies like encryption and multi-factor authentication to fortify access controls and protect sensitive information during the trans - mission and storage phases. Privacy-enhancing 11. Open Banking 11.1 Regulation of Open Banking
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