Singapore Tightens Regulations on Crypto Exchanges Amid Elevated Terrorism Financing Risks
Summary:
The Monetary Authority of Singapore (MAS) has raised the risk assessment of cryptocurrency exchanges from medium-low to medium-high in line with updates to Terrorism Financing laws. This comes as part of Singapore's efforts to safeguard its robust economic standing from potential exploitation by terrorist groups. The reclassification follows a recent report labeling digital payment tokens as high-risk. The updated regulations bring digital assets under user protection law, permitting stricter Anti-Money Laundering and Countering the Financing of Terrorism requirements imposed on Digital Payment Token (DPT) service providers.
The Monetary Authority of Singapore (MAS) has elevated the risk assessment of cryptocurrency exchange platforms from medium-low to medium-high in response to amendments to Singapore's Terrorism Financing regulations. With this action on July 1, the Singaporian regulatory body is striving to secure the country's status as a global hub for finance, business, and transport, shielding it from potential abuse by terrorist organizations. The newly updated regulations have classified Digital Payment Token (DPT) service providers in the medium-high risk category. Despite this, cross-border online transactions continue to pose a high risk due to their potential use for terrorist financing.
This revision for cryptocurrency platforms follows a recent report identifying digital payment tokens as posing a high risk. From the perspective of Singapore's revised Money Laundering National Risk Assessment (MLNRA), DPT service providers present significant risks and weak points in terms of Anti-Money Laundering (AML).
MAS has shown a proactive approach in regulating the digital asset market within the country's existing regulations. A few months ago, the regulator extended its ambit of regulated payment services to cover digital token services providers, thus bringing digital assets under consumer protection laws.
This expansion enabled the MAS to implement stringent Anti-Money Laundering, Countering the Financing of Terrorism, user protection, and financial stability requirements on DPT service providers. It also paved the way for DPTs to offer custodial services and facilitated the provision of cryptocurrency transfer services domestically and internationally.
Singapore is recognized for being crypto-friendly, with a notably high rate of cryptocurrency adoption. The global rate of cryptocurrency ownership stands at about 4.2%, but Singapore stands out with an 11.2% adoption rate. As per Singaporean regulations, digital currencies are categorized as digital payment tokens (DPTs). MAS has formally recognized Bitcoin (BTC) and Ether (ETH) as cryptocurrencies, placing them on par with other forms of legal assets in Singapore.
Published At
7/2/2024 2:41:27 PM
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