Singapore Enacts Licensing Requirements for Crypto Custody Services.
In a significant move to strengthen its financial regulatory framework, Singapore has enacted new licensing requirements for cryptocurrency custody services and other related activities. This development is part of the city-state’s ongoing efforts to establish itself as a global hub for financial innovation while ensuring the stability and security of its financial system.
The Monetary Authority of Singapore (MAS), the nation’s central bank, has expanded the scope of regulated cryptocurrency-related activities to include custodial services, cross-border money transfers, and the facilitation of crypto transactions between accounts and exchanges. This regulatory update follows the amendments to the Payment Services Act (PS Act) passed in 2021, which aimed to provide a comprehensive framework for payment service providers.
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The amendments to the PS Act were initially set to be enacted in the fourth quarter of 2021. However, the MAS has only recently made these changes operational. The delay can be attributed to the need for a thorough preparation phase to ensure that the new regulations would be effectively integrated into the existing financial system.
The recent turmoil in the cryptocurrency sector, highlighted by the crash of FTX, has underscored the importance of robust regulatory measures. Singapore’s response has been to introduce user protection and financial stability-related requirements for digital payment token (DPT) or cryptocurrency service providers. These requirements include segregating customers’ assets, maintaining proper books and records, and implementing effective systems and controls.
Entities currently engaged in crypto-related activities under the PS Act must initiate a transition process within 30 days and submit a license application within six months from April 4, 2024. This allows them to continue their operations temporarily until their applications are reviewed. A crucial aspect of the application process is the submission of an attestation report of compliance with anti-money laundering and countering the financing of terrorism requirements, verified by an external auditor within nine months.
Non-compliance with these new regulations will result in entities having to cease all crypto-related activities. This firm stance by the MAS reflects Singapore’s commitment to preventing the misuse of cryptocurrencies for illicit purposes while fostering a secure environment for legitimate crypto transactions.
The introduction of these licensing requirements is a testament to Singapore’s proactive approach to managing the risks associated with the burgeoning crypto market. By doing so, Singapore not only protects its financial ecosystem but also positions itself as a responsible and forward-thinking leader in the global financial landscape.
As the crypto industry continues to evolve, Singapore’s regulatory framework will likely serve as a model for other nations seeking to balance innovation with financial security. The MAS’s actions demonstrate a clear understanding of the complexities of the crypto market and a willingness to adapt its regulations to meet the challenges of a rapidly changing financial sector.
The expansion of regulated cryptocurrency-related activities by the MAS is a testament to Singapore’s dynamic approach to financial regulation. It demonstrates a clear recognition of the importance of adapting to technological advancements while ensuring that the integrity of the financial system is preserved. As the digital asset space matures, the MAS’s measures will undoubtedly play a crucial role in shaping the future of cryptocurrency regulation, not only in Singapore but across the globe.
Deribit secures Conditional VASP License in Dubai
The cryptocurrency landscape is witnessing a significant shift as Deribit, a leading crypto options exchange, secures a conditional Virtual Asset Service Provider (VASP) license for its Dubai-based unit, Deribit FZE. This development marks a pivotal moment for the exchange and highlights the evolving regulatory environment for digital assets.
Dubai has rapidly emerged as a global hub for the cryptocurrency industry, attracting some of the world’s leading crypto exchanges. This surge is largely attributed to the city’s progressive regulatory stance and its ambition to become a blockchain and Web3 technology center. Here’s a look at some of the prominent crypto exchanges that have established a presence in Dubai.
Deribit’s journey began as a Panama-based platform, renowned for its robust infrastructure that facilitated low latency trading and deep liquidity. With over 85% of the global crypto derivative activity, Deribit has established itself as a trusted name in the market, offering a range of products including bitcoin, ether, and Solana options, as well as bitcoin and ether perpetual futures.
The conditional VASP license, granted by Dubai’s Virtual Asset Regulatory Authority (VARA), is a testament to Deribit’s commitment to compliance and governance standards. The license remains non-operational until all conditions set by VARA are met, but once fully operational, it will enable Deribit FZE to serve institutional and qualified investors, while continuing to cater to retail investors through its Panama-based broker affiliate.
This strategic move is accompanied by the appointment of Luuk Strijers as the new CEO, who brings a wealth of experience from his tenure as Chief Commercial Officer. Under his leadership, Deribit aims to raise the quality and governance standards of its platform, having already obtained ISO and SOC2 certification and appointed non-executive directors to its board.
Dubai’s progressive regulatory framework presents a fertile ground for innovation in the digital asset space. A year ago, VARA introduced a comprehensive regulatory framework for crypto, requiring companies to secure licenses to operate legally within the country. The VASP license is mandatory for conducting virtual asset business in Dubai and reflects the city’s ambition to become a global hub for blockchain and Web3 technologies.
Deribit’s decision to relocate its global headquarters to Dubai is a strategic move that aligns with the city’s vision. The exchange’s commitment to security and transparency is further underscored by its ISO 27001 certification, which sets international standards for information security management systems.
The conditional VASP license is more than a regulatory milestone; it signifies Deribit’s unwavering dedication to providing a secure, transparent, and innovative platform for its users. With the addition of two Non-Executive Directors, Dennis Dijkstra and Willem Meijer, Deribit is poised for strategic growth and long-term success.
As the crypto industry continues to mature, the importance of regulatory compliance cannot be overstated. Deribit’s move to Dubai and the acquisition of the conditional VASP license are giant strides towards realizing an ambitious vision, steering the crypto industry to new horizons. This is a clear indication that the future of crypto is not just about technological innovation, but also about integrating into the global financial regulatory framework.