Singapore has persistently positioned itself as a
forward-thinking jurisdiction, balancing innovation with strong regulatory
oversight. As a fellow Singaporean, I’m very happy with its future planning.
The Financial Authority of Singapore (MAS) is in search of submissions for the Session Paper on the proposed regulatory strategy for
Digital Token Service Suppliers (DTSPs) underneath the Monetary Companies and
Markets Act 2022.
As an alternative of replying to the submission instantly, I’ll
attempt to share my perspective brazenly right here, providing insights, potential plans,
and timelines for implementation. Earlier than I begin, I’m sharing this in my
private capability: I don’t symbolize any self-claimed digital property knowledgeable
teams, associations, or colleges.
License Utility and Payment
Buildings
Within the first half of 2024, Singapore’s fintech market
noticed its cryptocurrency and blockchain sectors obtain US$211.90 million throughout
72 offers, marking a 22% enhance from US$166.30 million over 38 offers in
the second half of 2023.
Singapore has been actively engaged on strengthening
danger administration frameworks for digital asset tokenization and has just lately
launched an initiative to develop asset tokenization inside monetary companies.
MAS at present revealed enterprise conduct and client entry measures for Digital Cost Token companies in Singapore to restrict potential client hurt. They are going to be carried out by laws and tips, which is able to take impact in phases from mid-2024. https://t.co/laevvAlW0a pic.twitter.com/kxBLRQG0az
— MAS (@MAS_sg) November 23, 2023
The proposed license utility processes and price
constructions are essential parts that can form the DTSP panorama in
Singapore. From my perspective, MAS ought to take into account implementing a tiered
strategy to each timelines and charges, reflecting the range of DTSPs in phrases
of dimension, complexity, and danger profile.
For timelines, I suggest a three-tier system:
Quick-track
(60 days): For small, low-risk DTSPs with simple enterprise fashions.
Commonplace
(90 days): For medium-sized DTSPs or these with reasonably complicated operations.
Prolonged
(120+ days): For big, complicated DTSPs or these proposing novel enterprise fashions.
This tiered strategy would enable MAS to allocate
assets effectively whereas making certain thorough vetting of extra complicated
functions. The price constructions can observe an identical tiered system based mostly on
the DTSP’s annual income or transaction quantity may very well be carried out.
Singapore expands laws for digital fee token service suppliers https://t.co/xbJBsBSjHz
— The Register (@TheRegister) April 3, 2024
Minimal Monetary Necessities
The proposed minimal monetary necessities are a
crucial safeguard in opposition to potential market disruptions and client losses.
Primarily based on my evaluation, I consider a risk-based strategy to setting these
necessities is extra possible. This might contain:
Base
Capital Requirement: A minimal base capital for all DTSPs, no matter dimension
or companies provided.
Threat-Weighted
Capital Requirement: Extra capital necessities based mostly on the DTSP’s sorts of companies provided, transaction volumes, and danger profile.
Liquidity
Requirement: A minimal liquidity ratio to make sure DTSPs can meet short-term
obligations.
📣 #ESMA is in search of enter on Liquidity Administration Instruments for funds underneath the revised AIFMD and the #UCITS Directive.
🗓️ Ship your enter by 8 Octoberhttps://t.co/LxNEEX7i2O pic.twitter.com/6G2K4CVVim
— ESMA – EU Securities Markets Regulator 🇪🇺 (@ESMAComms) July 8, 2024
Particularly, suppliers with capital
ratios above 15% have been 30% much less prone to face operational disruptions throughout
durations of maximum market stress. I suggest that MAS take into account setting the bottom
capital requirement at SGD 250,000, with further risk-weighted necessities
that might enhance this quantity as much as SGD 5 million for the most important and most
complicated DTSPs.
Audit
Necessities
The proposed duties of CEOs, administrators, and companions,
together with audit necessities, are elementary to making sure good governance and
accountability within the DTSP sector. The next enhancement is really useful for
consideration:
Necessary
Coaching: Annual coaching packages for CEOs and administrators on regulatory
compliance, danger administration, and rising developments in digital property.
Threat
Committee: DTSPs above a sure dimension should set up a devoted
danger committee on the board stage.
Unbiased
Administrators: Mandating a minimal variety of unbiased administrators based mostly on the
DTSP’s dimension and complexity.
Audit
Frequency: Annual exterior audits for all DTSPs, with further quarterly
inner audits for bigger suppliers.
Monetary markets are shifting in the direction of asset tokenization, revolutionizing asset administration and funding.#Chainlink emphasizes interoperability and knowledge integration, echoing #TokenFi‘s imaginative and prescient of a future the place tokenized property reshape finance.
📰👇https://t.co/87Qp3ufa3X pic.twitter.com/BGSfD8E2ss
— TokenFi (@tokenfi) April 26, 2024
Regulators are more and more leveraging technological options to
improve their supervisory capabilities and handle huge quantities of information.
Consequently, companies should have interaction extra often with regulators concerning
fintech and regtech developments.
Fintech corporations that implement strong governance
constructions and conduct common audits are certainly much less prone to expertise
compliance breaches.
AML/CFT Measures
The measures proposed in elements 5–8 of the session
paper, significantly these associated to Anti-Cash Laundering (AML) and Countering
the Financing of Terrorism (CFT), are essential for sustaining the integrity of
Singapore’s monetary system. I suggest the next enhancements:
Threat-Primarily based
Method: Implement a tiered KYC/AML strategy based mostly on transaction volumes and
danger profiles.
Expertise
Integration: Encourage using AI and machine studying for transaction
monitoring and suspicious exercise detection.
Regulatory
Expertise (RegTech) Sandbox: Set up a sandbox setting for DTSPs to check
modern compliance options.
For current prospects onboarded previous to licensing, I
counsel a phased strategy:
Section 1
(0–6 months): Threat evaluation of current buyer base
Section 2
(6–12 months): Enhanced due diligence for high-risk prospects
Section 3
(12–18 months): Full compliance with new necessities for all prospects
Correspondent Account Companies
The proposed necessities for Correspondent Account
Companies and data sharing for legislation enforcement functions are important
elements of a complete regulatory framework. Maybe the next
would assist:
Standardized
Information Format: Develop a standardized knowledge format for data sharing throughout
the trade.
Blockchain
Analytics: Encourage using blockchain analytics instruments to reinforce
transaction traceability.
Safe
Info Sharing Platform: Set up a safe, centralized platform for
data sharing between DTSPs and legislation enforcement businesses.
Blockchain analytics instruments have been instrumental in
recovering stolen or illicitly obtained digital property worldwide. They permit legislation
enforcement businesses to hint and determine suspicious cryptocurrency
transactions on the blockchain , resulting in asset restoration efforts.
Expertise Threat Administration
The draft notices FSM-N28 to FSM-N33 cowl crucial
points of DTSP operations, together with know-how danger administration, cyber
hygiene, and conduct. Primarily based on my observations, I suggest the next:
Steady
Monitoring: Implement real-time monitoring programs for cyber threats and
operational dangers.
Incident
Response Drills: Mandate common incident response drills and simulations.
Third-Celebration
Threat Administration: Set up clear tips for managing dangers related to
third-party service suppliers.
Shopper
Schooling: Require DTSPs to allocate assets for ongoing client training
initiatives.
Bitcoin Heist Hits Japanese Alternate DMM Bitcoin https://t.co/RPT9Vxhsnf pic.twitter.com/HCXDznWG2o
— CySecurity Information (@EHackerNews) June 6, 2024
Relating to working hours, maybe MAS can take into account a
versatile strategy that enables for twenty-four/7 operations whereas making certain satisfactory danger
administration and buyer help. This might contain:
Core
working hours (e.g., 9 AM to five PM SGT) with full help companies
Prolonged
hours with automated programs and on-call help
Scheduled
upkeep home windows throughout low-volume durations
Timeline for Implementation:
To make sure a clean transition to the brand new regulatory
framework, I suggest the next timeline:
Month
0–3: Publication of ultimate laws and tips
Month
3–6: Trade session and suggestions interval
Month
6–9: Finalization of technical specs and reporting codecs
Month
9–12: DTSP preparation and system upgrades
Month
12–18: Phased implementation of recent necessities
Month
18–24: Full compliance deadline for all DTSPs
This timeline permits for a gradual implementation,
giving DTSPs ample time to adapt their programs and processes whereas
making certain that the regulatory framework is totally operational inside two years.
With cautious implementation and steady refinement,
this regulatory framework has the potential to cement Singapore’s place as a
world chief in digital asset regulation, attracting modern companies
whereas safeguarding the pursuits of customers and the broader monetary system.
Singapore has persistently positioned itself as a
forward-thinking jurisdiction, balancing innovation with strong regulatory
oversight. As a fellow Singaporean, I’m very happy with its future planning.
The Financial Authority of Singapore (MAS) is in search of submissions for the Session Paper on the proposed regulatory strategy for
Digital Token Service Suppliers (DTSPs) underneath the Monetary Companies and
Markets Act 2022.
As an alternative of replying to the submission instantly, I’ll
attempt to share my perspective brazenly right here, providing insights, potential plans,
and timelines for implementation. Earlier than I begin, I’m sharing this in my
private capability: I don’t symbolize any self-claimed digital property knowledgeable
teams, associations, or colleges.
License Utility and Payment
Buildings
Within the first half of 2024, Singapore’s fintech market
noticed its cryptocurrency and blockchain sectors obtain US$211.90 million throughout
72 offers, marking a 22% enhance from US$166.30 million over 38 offers in
the second half of 2023.
Singapore has been actively engaged on strengthening
danger administration frameworks for digital asset tokenization and has just lately
launched an initiative to develop asset tokenization inside monetary companies.
MAS at present revealed enterprise conduct and client entry measures for Digital Cost Token companies in Singapore to restrict potential client hurt. They are going to be carried out by laws and tips, which is able to take impact in phases from mid-2024. https://t.co/laevvAlW0a pic.twitter.com/kxBLRQG0az
— MAS (@MAS_sg) November 23, 2023
The proposed license utility processes and price
constructions are essential parts that can form the DTSP panorama in
Singapore. From my perspective, MAS ought to take into account implementing a tiered
strategy to each timelines and charges, reflecting the range of DTSPs in phrases
of dimension, complexity, and danger profile.
For timelines, I suggest a three-tier system:
Quick-track
(60 days): For small, low-risk DTSPs with simple enterprise fashions.
Commonplace
(90 days): For medium-sized DTSPs or these with reasonably complicated operations.
Prolonged
(120+ days): For big, complicated DTSPs or these proposing novel enterprise fashions.
This tiered strategy would enable MAS to allocate
assets effectively whereas making certain thorough vetting of extra complicated
functions. The price constructions can observe an identical tiered system based mostly on
the DTSP’s annual income or transaction quantity may very well be carried out.
Singapore expands laws for digital fee token service suppliers https://t.co/xbJBsBSjHz
— The Register (@TheRegister) April 3, 2024
Minimal Monetary Necessities
The proposed minimal monetary necessities are a
crucial safeguard in opposition to potential market disruptions and client losses.
Primarily based on my evaluation, I consider a risk-based strategy to setting these
necessities is extra possible. This might contain:
Base
Capital Requirement: A minimal base capital for all DTSPs, no matter dimension
or companies provided.
Threat-Weighted
Capital Requirement: Extra capital necessities based mostly on the DTSP’s sorts of companies provided, transaction volumes, and danger profile.
Liquidity
Requirement: A minimal liquidity ratio to make sure DTSPs can meet short-term
obligations.
📣 #ESMA is in search of enter on Liquidity Administration Instruments for funds underneath the revised AIFMD and the #UCITS Directive.
🗓️ Ship your enter by 8 Octoberhttps://t.co/LxNEEX7i2O pic.twitter.com/6G2K4CVVim
— ESMA – EU Securities Markets Regulator 🇪🇺 (@ESMAComms) July 8, 2024
Particularly, suppliers with capital
ratios above 15% have been 30% much less prone to face operational disruptions throughout
durations of maximum market stress. I suggest that MAS take into account setting the bottom
capital requirement at SGD 250,000, with further risk-weighted necessities
that might enhance this quantity as much as SGD 5 million for the most important and most
complicated DTSPs.
Audit
Necessities
The proposed duties of CEOs, administrators, and companions,
together with audit necessities, are elementary to making sure good governance and
accountability within the DTSP sector. The next enhancement is really useful for
consideration:
Necessary
Coaching: Annual coaching packages for CEOs and administrators on regulatory
compliance, danger administration, and rising developments in digital property.
Threat
Committee: DTSPs above a sure dimension should set up a devoted
danger committee on the board stage.
Unbiased
Administrators: Mandating a minimal variety of unbiased administrators based mostly on the
DTSP’s dimension and complexity.
Audit
Frequency: Annual exterior audits for all DTSPs, with further quarterly
inner audits for bigger suppliers.
Monetary markets are shifting in the direction of asset tokenization, revolutionizing asset administration and funding.#Chainlink emphasizes interoperability and knowledge integration, echoing #TokenFi‘s imaginative and prescient of a future the place tokenized property reshape finance.
📰👇https://t.co/87Qp3ufa3X pic.twitter.com/BGSfD8E2ss
— TokenFi (@tokenfi) April 26, 2024
Regulators are more and more leveraging technological options to
improve their supervisory capabilities and handle huge quantities of information.
Consequently, companies should have interaction extra often with regulators concerning
fintech and regtech developments.
Fintech corporations that implement strong governance
constructions and conduct common audits are certainly much less prone to expertise
compliance breaches.
AML/CFT Measures
The measures proposed in elements 5–8 of the session
paper, significantly these associated to Anti-Cash Laundering (AML) and Countering
the Financing of Terrorism (CFT), are essential for sustaining the integrity of
Singapore’s monetary system. I suggest the next enhancements:
Threat-Primarily based
Method: Implement a tiered KYC/AML strategy based mostly on transaction volumes and
danger profiles.
Expertise
Integration: Encourage using AI and machine studying for transaction
monitoring and suspicious exercise detection.
Regulatory
Expertise (RegTech) Sandbox: Set up a sandbox setting for DTSPs to check
modern compliance options.
For current prospects onboarded previous to licensing, I
counsel a phased strategy:
Section 1
(0–6 months): Threat evaluation of current buyer base
Section 2
(6–12 months): Enhanced due diligence for high-risk prospects
Section 3
(12–18 months): Full compliance with new necessities for all prospects
Correspondent Account Companies
The proposed necessities for Correspondent Account
Companies and data sharing for legislation enforcement functions are important
elements of a complete regulatory framework. Maybe the next
would assist:
Standardized
Information Format: Develop a standardized knowledge format for data sharing throughout
the trade.
Blockchain
Analytics: Encourage using blockchain analytics instruments to reinforce
transaction traceability.
Safe
Info Sharing Platform: Set up a safe, centralized platform for
data sharing between DTSPs and legislation enforcement businesses.
Blockchain analytics instruments have been instrumental in
recovering stolen or illicitly obtained digital property worldwide. They permit legislation
enforcement businesses to hint and determine suspicious cryptocurrency
transactions on the blockchain , resulting in asset restoration efforts.
Expertise Threat Administration
The draft notices FSM-N28 to FSM-N33 cowl crucial
points of DTSP operations, together with know-how danger administration, cyber
hygiene, and conduct. Primarily based on my observations, I suggest the next:
Steady
Monitoring: Implement real-time monitoring programs for cyber threats and
operational dangers.
Incident
Response Drills: Mandate common incident response drills and simulations.
Third-Celebration
Threat Administration: Set up clear tips for managing dangers related to
third-party service suppliers.
Shopper
Schooling: Require DTSPs to allocate assets for ongoing client training
initiatives.
Bitcoin Heist Hits Japanese Alternate DMM Bitcoin https://t.co/RPT9Vxhsnf pic.twitter.com/HCXDznWG2o
— CySecurity Information (@EHackerNews) June 6, 2024
Relating to working hours, maybe MAS can take into account a
versatile strategy that enables for twenty-four/7 operations whereas making certain satisfactory danger
administration and buyer help. This might contain:
Core
working hours (e.g., 9 AM to five PM SGT) with full help companies
Prolonged
hours with automated programs and on-call help
Scheduled
upkeep home windows throughout low-volume durations
Timeline for Implementation:
To make sure a clean transition to the brand new regulatory
framework, I suggest the next timeline:
Month
0–3: Publication of ultimate laws and tips
Month
3–6: Trade session and suggestions interval
Month
6–9: Finalization of technical specs and reporting codecs
Month
9–12: DTSP preparation and system upgrades
Month
12–18: Phased implementation of recent necessities
Month
18–24: Full compliance deadline for all DTSPs
This timeline permits for a gradual implementation,
giving DTSPs ample time to adapt their programs and processes whereas
making certain that the regulatory framework is totally operational inside two years.
With cautious implementation and steady refinement,
this regulatory framework has the potential to cement Singapore’s place as a
world chief in digital asset regulation, attracting modern companies
whereas safeguarding the pursuits of customers and the broader monetary system.
