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'All digital token transactions carry higher inherent risks': Singapore government
Increases regulation on operators to stop money laundering and terror funding
Singapore's Monetary Authority (MAS) has opined that all transactions involving digital tokens carry higher inherent money laundering and terrorist funding risks, and introduced new regulations so that local players are less likely to facilitate such crimes.
Singapore has previously regulated cryptocurrency services based in, and serving, local customers. The Financial Services and Markets Bill 2022, passed on Tuesday, extends those requirements to those serving foreign markets.
In an explanatory brief, the MAS said the bill is needed as the "anonymity and speed" of digital token transactions makes them hard to assess.
MAS board member and minister of state Alvin Tan explained [VIDEO] that Singapore's government is also worried it could become notorious for allowing dodgy deals in digi-dollars. Speaking in the nation's parliament, he said:
It is generally not necessary to impose additional requirements on a business that is created and operating in Singapore, if it does not provide services in Singapore.
Nonetheless, we recognize there may be reputational risks to Singapore in respect of DT service providers created in Singapore but that provide DT services overseas.
For instance, those involved in digital payment token or cryptocurrency activities if they are found to facilitate money laundering facilities.
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Critics of the law have said it will increase the compliance burden, already expressed in the Payments Services Act 2019 – a statute that addresses fintech innovation.
Singapore wants to appear tech savvy and welcoming to industry, while also being a strict and predictable jurisdiction. The new law means MAS will have the power to deny licenses to operators it deems unfit, as it fine tunes where exactly it balances between the two philosophies.
The city-state isn't the only Asian nation regulating crypto.
Last week, Indonesia announced it would start to impose value-added tax and income tax on crypto transaction profits, to expand the nation's tax base. Indonesia allows the trade of crypto as an asset, but does not allow it as payment.
In late March, Thailand's Securities and Exchange Commission (SEC) announced a ban on using digital assets as a means of making payments. Trading digital currencies as assets is still permitted. ®