The Monetary Authority of Singapore (MAS) has announced a new plan to provide more transparent and controlling guidelines for the escalating cryptocurrency industry within the country. Instead of dealing with the buying or sending of cryptocurrencies in Singapore, the updated rules will now focus on supervising custody services, setting clear rules for cross-border money transfers, and regulating the movement of funds between accounts and cryptocurrency exchanges.

Expected to commence in 2021, the modification in the scope of cryptocurrency regulations stems from adjustments made to the Payment Services Act (PS Act) of 2021, intended to manage payment service providers. Initially slated for implementation in the fourth quarter of 2021, the changes have only taken effect as of now due to disruptions within the cryptocurrency sector, including the collapse of notable crypto exchanges and companies such as FTX, prompting worldwide regulatory recalibrations.

Renowned blockchain intelligence firm TRM Labs' senior policy advisor and former MAS official, Angela Ang, views the expansion positively, particularly the newfound regulatory clarity surrounding custody services, deeming it a long-awaited progression for the cryptocurrency ecosystem.

The amendments laid out by MAS impose a set of conditions focused on shielding users and fortifying financial stability for digital payment token (DPT) or cryptocurrency service providers. These conditions encompass safeguarding customers' assets in trust accounts, maintaining meticulous records, and instating robust systems and controls. These stipulations will take effect within half a year, starting from April 4, 2024.

Establishments currently involved in cryptocurrency-associated undertakings under the Payment Services Act are required to commence a transitional process within 30 days and apply for a license within six months to prolong operations while awaiting assessment. Furthermore, these organizations must furnish a compliance report, endorsed by an external auditor, pertaining to anti-money laundering and counter-terrorism financing obligations within nine months.

MAS has made it clear that failure to comply with these regulatory mandates will lead to the suspension of all cryptocurrency-related activities for companies. These stringent measures epitomize the dedication towards cultivating and fostering a governed and safe milieu for cryptocurrency transactions in Singapore, striking a balance between innovation, investor protection, and financial robustness.