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FinTechs belonging to this category offer financial services using crypto currencies. This category also includes FinTechs utilising blockchain and distributed ledger technologies (DLT) upon which Bitcoin and Ethereum are based, among others. FinTechs develop and do research in this field in order to create new services – e.g. crypto currency exchange markets, wallet providers, NFTs-related services, new payment services, "smart contracts" or new clearing and settling services.
Introduction
Attitude of the country towards financial services using crypto currencies
Singapore has emerged as one of the leading countries in Asia for crypto start-ups, reflecting the success of the government’s policies and wider progressive stance towards technology development and innovation. Within the financial sphere, crypto currencies have primarily been considered for its characteristics as an asset of value rather than for any other purpose. In the past few years, MAS has proactively sought feedback on the regulations governing crypto currencies and made various amendments and clarifications to the applicable laws in Singapore.
Legal affairs
Obligations and requirements to provide financial services using crypto currencies described above
The applicable obligations and regulatory regime will depend on the use of the crypto currency and activities to be conducted by the business relating to the crypto currency.
In the realm of financial services, certain crypto currencies may resemble a security or other capital markets product. In such cases, businesses that provide financial services involving such crypto currencies may be deemed to be “dealing in capital markets products” under the Securities and Futures Act 2001 (SFA) and must be licensed as a Capital Markets Services (CMS) Licencee. Under the SFA, “dealing in capital markets products” as defined to mean (whether as principal or agent) making or offering to make with any person, or inducing or attempting to induce any person to enter into or to offer to enter into any agreement for or with a view to acquiring, disposing of, entering into, effecting, arranging, subscribing for, or underwriting any capital markets products.
If a financial service provider conducts an initial coin offering (ICO) comprising the crypto currencies that fall within the definition of “securities” or “securities-based derivatives contracts” must be accompanied by a prospectus.
Where a provider of financial services carries out services that fall within the definition of “digital payment token service” under the Payment Services Act 2019 (“PSA”), it will be subject to licensing requirements under the PSA. This also depends on whether, fundamentally, the crypto currency falls within the definition of “digital payment token” under the PSA. Digital payment token service providers can apply for either a Standard Payment Institution Licence (SPI) or a Major Payment Institution (MPI) Licence.