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Singapore MAS Crypto Exchange License: Step-by-Step Process

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Nov 27, 2024

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Singapore is one of the leading hubs for cryptocurrency enterprises, commonly known as crypto licenses available in the country. This dynamic ecosystem has drawn many top industry participants — an excellent choice for operating in the digital asset sector.

Singapore MAS Crypto Exchange License: Step-by-Step Process

Benefits of registering a crypto license in Singapore

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Crypto licenses available in Singapore offer numerous advantages to companies dealing with crypto assets. Let’s explore them:

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--> Regulatory clarity. Singapore provides clear, comprehensive regulations for cryptocurrency businesses, reducing uncertainty and enabling smoother operations. The crypto license in the Singapore framework underpins this clarity, ensuring businesses understand their compliance obligations from outset.

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--> Government support. The authority of Singapore actively supports fintech and blockchain innovations, offering various incentives, programs to encourage growth in the sector. The authority of Singapore often issues specific guidelines and clarifications to support the industry.

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--> Strategic location. The country is a gateway to Eastern and Western markets, facilitating international business operations. For companies seeking Singapore crypto exchanges, this strategic position offers unparalleled access to diverse markets and customer bases.

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--> Stable economy. A stable economy provides a reliable environment for business growth and long-term investments. Whether acquiring a Singapore crypto license or establishing broader financial operations, cryptocurrency companies benefit from a secure economic backdrop.

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--> English-speaking jurisdiction. English is the primary language, making it easier for businesses to navigate legal and regulatory requirements and conduct operations smoothly. Additionally, all regulations are available in English.

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--> Advanced infrastructure. The country boasts cutting-edge technological infrastructure, essential for developing and implementing blockchain, plus other advanced technologies. Infrastructure supports efficient licensed Singapore operations, from digital payment token services to broader fintech innovations.

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--> Skilled workforce. Singapore boasts a highly educated, skilled workforce, offering businesses access to top talent in the tech and financial sectors. Companies aiming to establish a crypto presence in Singapore can leverage this talent pool to drive innovation and achieve operational excellence.

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--> Favourable tax policies. With competitive tax rates and policies, Singapore offers financial advantages that attract businesses seeking cost-effective solutions. These favourable tax policies are a significant benefit for businesses.

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--> Strong legal framework. Singapore’s legal system is well-regarded globally for its transparency and enforcement, offering businesses security and peace of mind. The robust Monetary Authority of Singapore (MAS) oversight ensures that crypto license in Singapore holders operate within a secure legal environment.

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--> Financial hub. As a leading financial center, Singapore offers access to various financial services, including banking, investment, insurance. Companies obtaining crypto licenses in Singapore benefit from the hub status, which provides comprehensive financial support.

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--> Innovation ecosystem. The country has a thriving ecosystem for innovation, with numerous incubators, accelerators, research institutions supporting startup growth and development. Such an innovation ecosystem fosters business development and success.

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Current digital assets regulatory framework in Singapore

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In 2019, it was introduced the Payment Services Act (PSA) was introduced, which provides a comprehensive regulatory framework for crypto licenses in Singapore. Currently, the PSA is the main legal act that shall be considered by businesses involved in digital assets activities.

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The PSA aligns with the Financial Action Task Force (FATF) recommendations on international standards for combating money laundering, terrorism financing, proliferation. It covers various activities such as:

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Token services for digital payments (issuing, trading, transferring, holding, associated services)
Money transfers both inside and beyond borders
Purchase of merchants
E-money issuing
Custodians and exchanges of digital payment tokens

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Types of licenses for digital assets activities

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Conducting business with digital payment tokens requires obtaining a crypto license in Singapore from the Monetary Authority. It regulates crypto companies, plus ensures they adhere to stringent standards of governance, risk management, and money laundering controls.

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Getting crypto licenses in Singapore is a rigorous process that involves demonstrating compliance with these standards.

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Let’s look at such activities through the prism of Payment Services Act it may be seen that such law outlines three classes of cryptocurrency exchange licenses:

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--> Money-Changing License. Allows businesses to conduct money-changing services.

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--> Standard Payment Institution (SPI) License. Businesses handling smaller transaction volumes, the SPI license allows a range of payment services including digital payment token ones. Crypto licenses in Singapore may be considered the most popular and “balanced” for digital assets service.

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--> Major Payment Institution (MPI) License. Businesses handling larger transaction volumes, the MPI license is necessary. This license permits all types of payment services under the PSA, including digital payment token services.

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It should also be noted that depending on the business model, additional laws may be applicable, for example, the Financial Markets and Services Bill, Securities and Futures Act, Financial Advisers Act, etc., so additional authorizations or licenses may be required.

Licensing process for digital assets businesses

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Setting up a digital assets business in the country involves several key steps to ensure compliance with local regulations and secure exchange licenses in Singapore. Here’s a process overview:

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Pre-application preparation

A crypto company must gather the necessary documentation, including a business plan, compliance policies, and details of key personnel as well as conduct a risk assessment to ensure all regulatory requirements will be met. Prepare the safety deposit (100,000 SGD for a Standard Payment Institution, 200,000 SGD for a Major Payment Institution)

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Submission of application

Crypto companies must apply to Singapore MAS along with the required documents, fees. The application must include detailed information about business operations, risk management policies, cybersecurity measures.

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Initial review

MAS reviews the application for completeness and may request additional information or clarification.

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Assessment and due diligence

MAS conducts a thorough assessment, including due diligence checks on the applicant and key personnel. The applicant’s compliance with AML and CTF regulations is also evaluated.

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Decision

MAS considers whether the application complies with regulatory standards before deciding whether to give the license. Remember that creating a legal entity and receiving a favorable judgment from MAS entails having a registered office in the country and at least one resident director.

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By following these steps, a crypto company can ensure it is fully compliant with Singaporean regulations facilitate smooth and legal operations within this rapidly evolving market. Non-compliance with the described requirements may result in monetary penalties, criminal charges, license revocation, reputational damage.

Timeframe

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Getting a crypto license in Singapore often takes 4 to 6 months. The precise time frame may differ based on several variables, including license type, standard of the paperwork submitted, adherence to legal standards, review procedure.

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Notable digital assets businesses registered in Singapore

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Singapore is one of the most attractive countries for companies operating in the digital asset sector due to its favorable legal and tax regime.

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Many well-known cryptocurrency companies, including major exchanges such as the Singapore crypto exchange, Crypto.com, Bitrue, are registered in the country. These service providers chose this place because of its transparent regulations that support innovation and its stable legal environment.

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The authority of Singapore, known by its robust regulatory framework and tech-friendly policies, has emerged as a global hub for crypto licensed companies. The city-state’s approach to taxation of crypto activities is a testament to its commitment to fostering a conducive environment for licensed crypto businesses.

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Crypto activities taxation

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Individual investors benefit from a crypto friendly environment with no authorized capital gains tax or income tax on crypto holdings.

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However, an 8% goods and services tax (GST) applies when buying, selling, or trading cryptocurrencies not designated as Digital Payment Tokens (DPTs).

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For those involved in professional trading or who have a crypto company, profits are taxed as regular corporate income.

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If you trade crypto in Singapore as a business or receive it in exchange for goods and services, you will be subject to income tax. Tax rates range from 0-22%. Businesses that trade Bitcoin for profit are taxed at the corporate rate — 17%. Payments made with digital tokens like Bitcoin or Ether are tax-free for goods and services, although there is a 7% GST.

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Individuals earning SGD 300 or more annually from staking and lending crypto must pay income tax on these gains. As with other income forms, they are responsible for self-reporting their cryptocurrency-related income. The Inland Revenue Authority of Singapore (IRAS) provides guidelines for crypto taxation and calculating corporate income from crypto trading activities.

Type of business	Tax
Businesses that trade Bitcoin for profit are taxed at the corporate rate	17%
Payments made with digital tokens like Bitcoin or Ether are tax-free for goods and services, although there is a 7% GST.	0% 7% GST.

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Cryptocurrency activities share capital

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A crypto company in Singapore, including a cryptocurrency related activities firm, must have a minimum share capital of one dollar in the preferred currency of the shareholder. However, the minimum share capital requirement is SGD 250,00 for a Major Payment Institution license, which is frequently necessary for cryptocurrency activities.

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5 ways how our team can assist you

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Consultation - we offer expert consultations to help you understand the legal and regulatory landscape of the Singaporean digital asset market.
Business model analysis and structuring - we will scrutinize documentation, contracts, and agreements associated with your projects to ensure legal compliance and minimize disputes.
Document preparation and submission - our team helps gather and prepare all necessary documentation for obtaining the appropriate licenses and permits, including the Singapore crypto license.
Regulator interaction - we manage interactions with regulatory authorities, ensuring smooth communication and adherence to all regulatory requirements.
Post-licensing support and consultation - we provide ongoing support and consultation even after the licensing process is complete, helping you navigate any regulatory changes, maintain compliance, manage your income tax obligations.