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MAS Issues Fifth DPT License to Crypto Exchange Coinhako

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Singapore-based cryptocurrency platform Coinhako has been granted a Major Payment Institution (MPI) license from the Monetary Authority of Singapore (MAS) to offer Digital Payment Token (DPT) Services under the Payment Services Act (PSA). The exchange is one of five firms that has received a DPT license from the MAS in the last year, reflecting Singapore’s intention to enhance its global reputation as a regulated destination for cryptocurrency services. 

Many DPT service providers currently operate in Singapore under an exemption until their application is reviewed by MAS, or withdrawn by the applicant. Coinhako was the first local non-bank crypto exchange to secure in-principle approval from MAS last November. Since then, the firm’s co-founder and chief executive officer, Yusho Liu, said that obtaining the license has always been a top priority for the company in light of its “compliant-first approach”. 

The MPI license allows Coinhako to provide payment services in Singapore without being subject to specific thresholds. “Having received the MPI license to provide DPT services, Coinhako is uniquely positioned to present a tier-one regulated, secure, and technologically advanced crypto-solution platform to the regional markets,” said Gerry Eng, Co-Founder and Chief Technology Officer of Coinhako.

Crypto regulation in Singapore

Singapore’s regulatory and operating environment has made it a popular location for crypto companies targeting both domestic and international consumers. While the country’s crypto ownership rate currently sits at 15.8 percent, slightly above the global average of 15.5 percent, authorities have issued guidance and repeatedly warned that trading in DPT presents a high risk and is not suitable for the general public, due to its volatility. 

In December 2017, MAS issued a press release warning of the risks of crypto speculation, while Deputy Prime Minister Tharman Shanmugaratnam stated that cryptocurrencies are subject to the same AML/CFT measures as traditional fiat currencies. Just over a year later, the PSA came into effect, mandating all DPT serve providers in Singapore to be registered and licensed, giving supervisory powers to the MAS over such entities.

In a bid to shield retail investors from potential risks, the MAS issued guidance in January 2022 to limit the marketing or advertising of DPT services in Singapore’s public areas or through the engagement of third parties. In April 2022 the Financial Services and Markets (FSM) Bill was passed, which enhanced MAS’ regulatory and enforcement framework across Singapore’s financial sector. 

These recent extensions to MAS’ powers and the tightening of crypto rules demonstrate the country’s pragmatic approach to crypto exchange regulation, which is now broadly aligned with Financial Action Task Force (FATF) guidance. However, new regulations will likely involve stronger AML/CFT standards for cryptocurrency service providers, and introduce more robust technology risk management requirements for financial institutions. 

Key takeaways

Firms looking to receive (or retain) license to offer DPT services should review the latest announcements and issued guidance from MAS, and the practices employed by Coinhako. As of April this year, MAS reported having received more than 580 applications for payment services licenses so far. MAS also noted that incomplete or unclear applications take longer to process, so compliance teams should ensure the quality of their risk management systems and controls are articulated in full when applying. 

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Originally published 13 May 2022, updated 20 May 2022

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