Crypto Regulations | May 17, 2024

Crypto regulations: learning from Singapore & Hong Kong

by Hedi Navazan

Director of Compliance & Regulation

To help crypto compliance teams and regulators navigate the constantly evolving crypto regulation landscape, we have published our report on how different countries and economic regions approach compliance and regulation in the crypto asset trading sphere. In this blog- the third in a series- we examine the regulatory positions of Singapore and Hong Kong. 

Crypto compliance and regulation in Singapore and Hong Kong 

Both APAC countries have embraced cryptocurrencies as a potential economic boon for the regional economy and have set legislation in place for safe and stable regulatory regimens which are attractive to investors seeking to explore the crypto space. 

Crypto compliance and regulation in Singapore 

Like Australia, Singapore has been proactive in its approach to safely integrating crypto asset trading with the conventional economy. As early as April 2022, the Financial Markets and Services Bill (FSM Bill) was passed. The legislation aligns the scope of regulated digital token services with  FATF Standards. 

In October 2022, authorities engaged in a public participation process  to test opinion about digital payment token services (DPTs), and found that consumers had concerns about the safety of such funds, and a desire for transparency in declaring possible financial risks. From this, the Monetary Authority of Singapore (MAS) released new DPT service provider (DPTSP) regulations in July 2023, which protected customers’ funds for a time in the event of SPs going bankrupt. 

Meanwhile, entities wishing to sell capital market products are covered by the rigors of the Securities and Futures Act (SFA), which requires them to be appropriately licensed and to adhere to certain requirements. Additionally, the Payment Services Act (PSA) governs how DPTs are regulated and provides guidance on the status of stablecoins. 

However, although the MAS is forward-thinking about crypto trading, it is not simple to for virtual asset service providers (VASPs) to get licensed. A ten-point list of licensing requirements emphasizes financial stability, strong AML/CFT measures in place, and stringent risk management controls. 

Crypto compliance and regulation in Hong Kong 

Like Singapore, Hong Kong has taken a proactive stance on safely integrating the crupto industry into its current economic system and demonstrates a will to promote APAC as a hub for digital assets trading. 

On May 31, 2023, the Securities and Futures Commission (SFC) announced new regulatory measures for virtual asset trading platforms (VATPs) to be adhered to from June 01, 2023. These regulations are governed by both the Securities and Futures Ordinance (SFO) and the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO). 

Also on May 31, 2023, the SFC issued a circular on transitional arrangements under the new licensing regime for existing VATPs, which requires that such entities be incorporated in Hong Kong, have a provable physical presence in the country, and have a true business presence in the region. 

Authorities also issued the VATP Licensing Handbook to guide businesses on how to apply for and maintain trading licenses. Additionally, the seven-point licensing regime for applicants outlines how they must adhere to the AML/CFT Guideline. 

APAC’s crypto compliance and regulation in the future 

The forward-thinking and proactive approach taken by Singapore and Hong Kong balances consumer safety, progress, and acceptance of the rise of cryptocurrency. Alongside Australia in APAC, this will stand them all in good stead for a future in which crypto trading is wholly integrated with the conventional economy. 

Find out how you can safely explore everything crypto has to offer here. 

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