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Singapore Gets Tough on Offshore Crypto Operators as Time Runs Out
- Singapore has implemented a new DTSP licensing framework to regulate digital asset operations, tightening compliance expectations for offshore crypto operators using Singapore as a base to evade oversight.
- The Monetary Authority of Singapore's decision is driven by concerns over money laundering and terrorism financing risks associated with cross-border digital token services operating without traditional financial checks.
- All Singapore-based or incorporated entities providing digital token services to overseas clients must obtain a DTSP license by 30 June 2025, with no grace period provided for unlicensed operators to comply.
- MAS requires a minimum capital of S$250,000 and an annual license fee of S$10,000 for all DTSPs, irrespective of size or services offered, to ensure financial stability and commitment to regulatory standards.
- Stricter rules on money laundering, customer due diligence (CDD), tech safeguards, incident reporting, business conduct standards, and risk disclosures have been imposed on DTSPs to enhance security and transparency.
- MAS expects DTSPs to adhere to tech security measures, incident reporting within one hour, and follow clear business conduct rules, including minimum operating hours and transparent risk disclosures.
- The updated Singapore DTSP licensing framework emphasizes responsibility for firms operating in the digital asset space, requiring them to choose between licensing, restructuring, or exiting if they want to continue operating.
- Firms must ensure compliance with MAS regulations regarding financial thresholds, customer due diligence, tech safeguards, and business conduct rules to maintain operational and financial stability.
- The licensing framework sets clear boundaries for digital asset regulation, signaling a shift towards stricter oversight and accountability for entities providing digital token services in Singapore.
- The focus is on protecting Singapore's reputation and addressing risks associated with money laundering and terrorism financing by enforcing regulatory requirements on digital asset operators.
- Overall, the updated licensing framework aims to strike a balance between fostering innovation in the digital asset space while safeguarding against financial crimes and ensuring compliance with regulatory standards.
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