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Singapore has constantly positioned itself as a
forward-thinking jurisdiction, balancing innovation with sturdy regulatory
oversight. As a fellow Singaporean, I’m very happy with its future planning.
The Financial Authority of Singapore (MAS) is searching for submissions for the Session Paper on the proposed regulatory method for
Digital Token Service Suppliers (DTSPs) below the Monetary Companies and
Markets Act 2022.
As an alternative of replying to the submission instantly, I’ll
attempt to share my standpoint overtly right here, providing insights, potential plans,
and timelines for implementation. Earlier than I begin, I’m sharing this in my
private capability: I don’t signify any self-claimed digital belongings skilled
teams, associations, or colleges.
License Utility and Charge
Buildings
Within the first half of 2024, Singapore’s fintech market
noticed its cryptocurrency and blockchain sectors obtain US$211.90 million throughout
72 offers, marking a 22% improve from US$166.30 million over 38 offers in
the second half of 2023.
Singapore has been actively engaged on strengthening
danger administration frameworks for digital asset tokenization and has lately
launched an initiative to increase asset tokenization inside monetary providers.
MAS in the present day printed enterprise conduct and client entry measures for Digital Cost Token providers in Singapore to restrict potential client hurt. They are going to be carried out by laws and tips, which can take impact in phases from mid-2024. https://t.co/laevvAlW0a pic.twitter.com/kxBLRQG0az
— MAS (@MAS_sg) November 23, 2023
The proposed license utility processes and payment
constructions are essential components that can form the DTSP panorama in
Singapore. From my perspective, MAS ought to take into account implementing a tiered
method to each timelines and charges, reflecting the range of DTSPs in phrases
of measurement, complexity, and danger profile.
For timelines, I suggest a three-tier system:
Quick-track
(60 days): For small, low-risk DTSPs with easy enterprise fashions.
Normal
(90 days): For medium-sized DTSPs or these with reasonably complicated operations.
Prolonged
(120+ days): For big, complicated DTSPs or these proposing novel enterprise fashions.
This tiered method would permit MAS to allocate
assets effectively whereas making certain thorough vetting of extra complicated
functions. The payment constructions can observe the same tiered system primarily based on
the DTSP’s annual income or transaction quantity could possibly be carried out.
Singapore expands laws for digital cost token service suppliers https://t.co/xbJBsBSjHz
— The Register (@TheRegister) April 3, 2024
Minimal Monetary Necessities
The proposed minimal monetary necessities are a
crucial safeguard in opposition to potential market disruptions and client losses.
Based mostly on my evaluation, I consider a risk-based method to setting these
necessities is extra possible. This might contain:
Base
Capital Requirement: A minimal base capital for all DTSPs, no matter measurement
or providers provided.
Danger-Weighted
Capital Requirement: Extra capital necessities primarily based on the DTSP’s kinds of providers provided, transaction volumes, and danger profile.
Liquidity
Requirement: A minimal liquidity ratio to make sure DTSPs can meet short-term
obligations.
📣 #ESMA is searching for enter on Liquidity Administration Instruments for funds below the revised AIFMD and the #UCITS Directive.
🗓️ Ship your enter by 8 Octoberhttps://t.co/LxNEEX7i2O pic.twitter.com/6G2K4CVVim
— ESMA – EU Securities Markets Regulator 🇪🇺 (@ESMAComms) July 8, 2024
Particularly, suppliers with capital
ratios above 15% have been 30% much less more likely to face operational disruptions throughout
intervals of utmost market stress. I suggest that MAS take into account setting the bottom
capital requirement at SGD 250,000, with extra risk-weighted necessities
that might improve this quantity as much as SGD 5 million for the most important and most
complicated DTSPs.
Audit
Necessities
The proposed duties of CEOs, administrators, and companions,
together with audit necessities, are elementary to making sure good governance and
accountability within the DTSP sector. The next enhancement is really useful for
consideration:
Obligatory
Coaching: Annual coaching packages for CEOs and administrators on regulatory
compliance, danger administration, and rising tendencies in digital belongings.
Danger
Committee: DTSPs above a sure measurement should set up a devoted
danger committee on the board degree.
Unbiased
Administrators: Mandating a minimal variety of unbiased administrators primarily based on the
DTSP’s measurement and complexity.
Audit
Frequency: Annual exterior audits for all DTSPs, with extra quarterly
inside audits for bigger suppliers.
Monetary markets are shifting in direction of asset tokenization, revolutionizing asset administration and funding.#Chainlink emphasizes interoperability and information integration, echoing #TokenFi’s imaginative and prescient of a future the place tokenized belongings reshape finance.
📰👇https://t.co/87Qp3ufa3X pic.twitter.com/BGSfD8E2ss
— TokenFi (@tokenfi) April 26, 2024
Regulators are more and more leveraging technological options to
improve their supervisory features and handle huge quantities of information.
Consequently, corporations should have interaction extra ceaselessly with regulators relating to
fintech and regtech developments.
Fintech firms that implement sturdy governance
constructions and conduct common audits are certainly much less more likely to expertise
compliance breaches.
AML/CFT Measures
The measures proposed in components 5–8 of the session
paper, significantly these associated to Anti-Cash Laundering (AML) and Countering
the Financing of Terrorism (CFT), are essential for sustaining the integrity of
Singapore’s monetary system. I suggest the next enhancements:
Danger-Based mostly
Method: Implement a tiered KYC/AML method primarily based on transaction volumes and
danger profiles.
Know-how
Integration: Encourage the usage of AI and machine studying for transaction
monitoring and suspicious exercise detection.
Regulatory
Know-how (RegTech) Sandbox: Set up a sandbox setting for DTSPs to check
revolutionary compliance options.
For present prospects onboarded previous to licensing, I
recommend a phased method:
Part 1
(0–6 months): Danger evaluation of present buyer base
Part 2
(6–12 months): Enhanced due diligence for high-risk prospects
Part 3
(12–18 months): Full compliance with new necessities for all prospects
Correspondent Account Companies
The proposed necessities for Correspondent Account
Companies and data sharing for legislation enforcement functions are important
elements of a complete regulatory framework. Maybe the next
would assist:
Standardized
Information Format: Develop a standardized information format for info sharing throughout
the business.
Blockchain
Analytics: Encourage the usage of blockchain analytics instruments to reinforce
transaction traceability.
Safe
Data Sharing Platform: Set up a safe, centralized platform for
info sharing between DTSPs and legislation enforcement companies.
Blockchain analytics instruments have been instrumental in
recovering stolen or illicitly obtained digital belongings worldwide. They permit legislation
enforcement companies to hint and establish suspicious cryptocurrency
transactions on the blockchain , resulting in asset restoration efforts.
Know-how Danger Administration
The draft notices FSM-N28 to FSM-N33 cowl crucial
elements of DTSP operations, together with know-how danger administration, cyber
hygiene, and conduct. Based mostly on my observations, I suggest the next:
Steady
Monitoring: Implement real-time monitoring methods for cyber threats and
operational dangers.
Incident
Response Drills: Mandate common incident response drills and simulations.
Third-Get together
Danger Administration: Set up clear tips for managing dangers related to
third-party service suppliers.
Client
Training: Require DTSPs to allocate assets for ongoing client training
initiatives.
Bitcoin Heist Hits Japanese Alternate DMM Bitcoin https://t.co/RPT9Vxhsnf pic.twitter.com/HCXDznWG2o
— CySecurity Information (@EHackerNews) June 6, 2024
Concerning working hours, maybe MAS can take into account a
versatile method that permits for twenty-four/7 operations whereas making certain ample danger
administration and buyer help. This might contain:
Core
working hours (e.g., 9 AM to five PM SGT) with full help providers
Prolonged
hours with automated methods and on-call help
Scheduled
upkeep home windows throughout low-volume intervals
Timeline for Implementation:
To make sure a clean transition to the brand new regulatory
framework, I suggest the next timeline:
Month
0–3: Publication of ultimate laws and tips
Month
3–6: Trade session and suggestions interval
Month
6–9: Finalization of technical specs and reporting codecs
Month
9–12: DTSP preparation and system upgrades
Month
12–18: Phased implementation of latest necessities
Month
18–24: Full compliance deadline for all DTSPs
This timeline permits for a gradual implementation,
giving DTSPs adequate time to adapt their methods and processes whereas
making certain that the regulatory framework is totally operational inside two years.
With cautious implementation and steady refinement,
this regulatory framework has the potential to cement Singapore’s place as a
international chief in digital asset regulation, attracting revolutionary companies
whereas safeguarding the pursuits of shoppers and the broader monetary system.
Singapore has constantly positioned itself as a
forward-thinking jurisdiction, balancing innovation with sturdy regulatory
oversight. As a fellow Singaporean, I’m very happy with its future planning.
The Financial Authority of Singapore (MAS) is searching for submissions for the Session Paper on the proposed regulatory method for
Digital Token Service Suppliers (DTSPs) below the Monetary Companies and
Markets Act 2022.
As an alternative of replying to the submission instantly, I’ll
attempt to share my standpoint overtly right here, providing insights, potential plans,
and timelines for implementation. Earlier than I begin, I’m sharing this in my
private capability: I don’t signify any self-claimed digital belongings skilled
teams, associations, or colleges.
License Utility and Charge
Buildings
Within the first half of 2024, Singapore’s fintech market
noticed its cryptocurrency and blockchain sectors obtain US$211.90 million throughout
72 offers, marking a 22% improve from US$166.30 million over 38 offers in
the second half of 2023.
Singapore has been actively engaged on strengthening
danger administration frameworks for digital asset tokenization and has lately
launched an initiative to increase asset tokenization inside monetary providers.
MAS in the present day printed enterprise conduct and client entry measures for Digital Cost Token providers in Singapore to restrict potential client hurt. They are going to be carried out by laws and tips, which can take impact in phases from mid-2024. https://t.co/laevvAlW0a pic.twitter.com/kxBLRQG0az
— MAS (@MAS_sg) November 23, 2023
The proposed license utility processes and payment
constructions are essential components that can form the DTSP panorama in
Singapore. From my perspective, MAS ought to take into account implementing a tiered
method to each timelines and charges, reflecting the range of DTSPs in phrases
of measurement, complexity, and danger profile.
For timelines, I suggest a three-tier system:
Quick-track
(60 days): For small, low-risk DTSPs with easy enterprise fashions.
Normal
(90 days): For medium-sized DTSPs or these with reasonably complicated operations.
Prolonged
(120+ days): For big, complicated DTSPs or these proposing novel enterprise fashions.
This tiered method would permit MAS to allocate
assets effectively whereas making certain thorough vetting of extra complicated
functions. The payment constructions can observe the same tiered system primarily based on
the DTSP’s annual income or transaction quantity could possibly be carried out.
Singapore expands laws for digital cost token service suppliers https://t.co/xbJBsBSjHz
— The Register (@TheRegister) April 3, 2024
Minimal Monetary Necessities
The proposed minimal monetary necessities are a
crucial safeguard in opposition to potential market disruptions and client losses.
Based mostly on my evaluation, I consider a risk-based method to setting these
necessities is extra possible. This might contain:
Base
Capital Requirement: A minimal base capital for all DTSPs, no matter measurement
or providers provided.
Danger-Weighted
Capital Requirement: Extra capital necessities primarily based on the DTSP’s kinds of providers provided, transaction volumes, and danger profile.
Liquidity
Requirement: A minimal liquidity ratio to make sure DTSPs can meet short-term
obligations.
📣 #ESMA is searching for enter on Liquidity Administration Instruments for funds below the revised AIFMD and the #UCITS Directive.
🗓️ Ship your enter by 8 Octoberhttps://t.co/LxNEEX7i2O pic.twitter.com/6G2K4CVVim
— ESMA – EU Securities Markets Regulator 🇪🇺 (@ESMAComms) July 8, 2024
Particularly, suppliers with capital
ratios above 15% have been 30% much less more likely to face operational disruptions throughout
intervals of utmost market stress. I suggest that MAS take into account setting the bottom
capital requirement at SGD 250,000, with extra risk-weighted necessities
that might improve this quantity as much as SGD 5 million for the most important and most
complicated DTSPs.
Audit
Necessities
The proposed duties of CEOs, administrators, and companions,
together with audit necessities, are elementary to making sure good governance and
accountability within the DTSP sector. The next enhancement is really useful for
consideration:
Obligatory
Coaching: Annual coaching packages for CEOs and administrators on regulatory
compliance, danger administration, and rising tendencies in digital belongings.
Danger
Committee: DTSPs above a sure measurement should set up a devoted
danger committee on the board degree.
Unbiased
Administrators: Mandating a minimal variety of unbiased administrators primarily based on the
DTSP’s measurement and complexity.
Audit
Frequency: Annual exterior audits for all DTSPs, with extra quarterly
inside audits for bigger suppliers.
Monetary markets are shifting in direction of asset tokenization, revolutionizing asset administration and funding.#Chainlink emphasizes interoperability and information integration, echoing #TokenFi’s imaginative and prescient of a future the place tokenized belongings reshape finance.
📰👇https://t.co/87Qp3ufa3X pic.twitter.com/BGSfD8E2ss
— TokenFi (@tokenfi) April 26, 2024
Regulators are more and more leveraging technological options to
improve their supervisory features and handle huge quantities of information.
Consequently, corporations should have interaction extra ceaselessly with regulators relating to
fintech and regtech developments.
Fintech firms that implement sturdy governance
constructions and conduct common audits are certainly much less more likely to expertise
compliance breaches.
AML/CFT Measures
The measures proposed in components 5–8 of the session
paper, significantly these associated to Anti-Cash Laundering (AML) and Countering
the Financing of Terrorism (CFT), are essential for sustaining the integrity of
Singapore’s monetary system. I suggest the next enhancements:
Danger-Based mostly
Method: Implement a tiered KYC/AML method primarily based on transaction volumes and
danger profiles.
Know-how
Integration: Encourage the usage of AI and machine studying for transaction
monitoring and suspicious exercise detection.
Regulatory
Know-how (RegTech) Sandbox: Set up a sandbox setting for DTSPs to check
revolutionary compliance options.
For present prospects onboarded previous to licensing, I
recommend a phased method:
Part 1
(0–6 months): Danger evaluation of present buyer base
Part 2
(6–12 months): Enhanced due diligence for high-risk prospects
Part 3
(12–18 months): Full compliance with new necessities for all prospects
Correspondent Account Companies
The proposed necessities for Correspondent Account
Companies and data sharing for legislation enforcement functions are important
elements of a complete regulatory framework. Maybe the next
would assist:
Standardized
Information Format: Develop a standardized information format for info sharing throughout
the business.
Blockchain
Analytics: Encourage the usage of blockchain analytics instruments to reinforce
transaction traceability.
Safe
Data Sharing Platform: Set up a safe, centralized platform for
info sharing between DTSPs and legislation enforcement companies.
Blockchain analytics instruments have been instrumental in
recovering stolen or illicitly obtained digital belongings worldwide. They permit legislation
enforcement companies to hint and establish suspicious cryptocurrency
transactions on the blockchain , resulting in asset restoration efforts.
Know-how Danger Administration
The draft notices FSM-N28 to FSM-N33 cowl crucial
elements of DTSP operations, together with know-how danger administration, cyber
hygiene, and conduct. Based mostly on my observations, I suggest the next:
Steady
Monitoring: Implement real-time monitoring methods for cyber threats and
operational dangers.
Incident
Response Drills: Mandate common incident response drills and simulations.
Third-Get together
Danger Administration: Set up clear tips for managing dangers related to
third-party service suppliers.
Client
Training: Require DTSPs to allocate assets for ongoing client training
initiatives.
Bitcoin Heist Hits Japanese Alternate DMM Bitcoin https://t.co/RPT9Vxhsnf pic.twitter.com/HCXDznWG2o
— CySecurity Information (@EHackerNews) June 6, 2024
Concerning working hours, maybe MAS can take into account a
versatile method that permits for twenty-four/7 operations whereas making certain ample danger
administration and buyer help. This might contain:
Core
working hours (e.g., 9 AM to five PM SGT) with full help providers
Prolonged
hours with automated methods and on-call help
Scheduled
upkeep home windows throughout low-volume intervals
Timeline for Implementation:
To make sure a clean transition to the brand new regulatory
framework, I suggest the next timeline:
Month
0–3: Publication of ultimate laws and tips
Month
3–6: Trade session and suggestions interval
Month
6–9: Finalization of technical specs and reporting codecs
Month
9–12: DTSP preparation and system upgrades
Month
12–18: Phased implementation of latest necessities
Month
18–24: Full compliance deadline for all DTSPs
This timeline permits for a gradual implementation,
giving DTSPs adequate time to adapt their methods and processes whereas
making certain that the regulatory framework is totally operational inside two years.
With cautious implementation and steady refinement,
this regulatory framework has the potential to cement Singapore’s place as a
international chief in digital asset regulation, attracting revolutionary companies
whereas safeguarding the pursuits of shoppers and the broader monetary system.
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