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Fintech Market Overview

This article does not constitute legal advice.

Cryptocurrencies in Singapore

Fintech Software

There is no specific regulation of blockchain technology on its own. However, the manner in which blockchain technology is used and the product or service that is offered (based on blockchain technology) may be construed as a regulated activity.1

Depending on the characteristics of the digital token, digital tokens could be construed as a form of security such as a debenture or share, a unit in a collective investment scheme or even a derivatives contract. If the digital tokens issued in an ICO fall within the definition of securities, a collective investment scheme or derivatives contracts under the SFA (or display characteristics similar to these capital markets products), it will raise potential financial regulatory issues under the SFA and other laws pertaining to financial regulation in Singapore. These include prospectus registration requirements on the issuer for an offer of securities, units in a collective investment scheme or securities-based derivatives to persons in Singapore and, possibly, licensing issues such as those for dealing in capital markets products by the issuer or intermediaries. In addition, platforms facilitating secondary trading of these digital tokens may also have to be approved or recognised by MAS as an approved exchange or recognised market operator, respectively, under the SFA.1

In addition, digital tokens could be characterised as 'digital payment tokens'. Depending on the nature of their usage or the services that are associated with them, these services could be construed as a payment service under the Payment Services Act. This could in turn mean that these payment services may need to be licensed under the Payment Services Act, unless a licensing exemption applies.1

In general, anti-money laundering (AML) and combating the financing of terrorism (CFT) rules apply to financial institutions that deal in cryptocurrencies and tokens and financial institutions that have customers that deal in cryptocurrencies and tokens. The relevant notices and guidelines that are imposed on financial institutions provide that financial institutions will need to identify the AML and CFT risks in relation to new products and new business practices, including new delivery mechanisms and new or developing technologies that favour anonymity. Given that cryptocurrency transactions often involve anonymous transactions at some level, we would expect MAS to require financial institutions to pay particular attention to cryptocurrency-related transactions or transactions arising from cryptocurrency-related transactions.1

Smart contracts in Singapore

Fintech in Singapore

Fintech in other countries

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Singapore Fintech Lawyers

Ilya Druzhinin

Ilya Druzhinin

I have over 22 years of experience in legal practice, most of which is accompanied by e-com and fintech projects

Languages: RU EN

Notes
  1. https://thelawreviews.co.uk/title/the-financial-technology-law-review/singapore
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