The Payment Services (Amendment) Bill – Enhancing regulation of DPTS, money transfer services and other amendments

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On 2 November 2020, the Payment Services (Amendment) Bill was introduced in Singapore Parliament on the back of a consultation paper issued by the Monetary Authority of Singapore on 23 December 2019. In collaboration with Ashurst ADTLaw, we have prepared an article to outline the key changes and what you need to know if you are affected.

What is this?

The Payment Services (Amendment) Bill (the “Bill“) was introduced in parliament on 2 November 2020. This came on the back of a consultation paper issued by the Monetary Authority of Singapore (“MAS“) on 23 December 2019 (the “Consultation Paper“). The Bill will introduce changes to the Payments Services Act (No. 2 of 2019) (the “PSA“) which came into force on 28 January 2020.

What are the key changes?

Expanding categories of regulated Digital Payment Token (“DPT”) services

Among other changes, any service of safeguarding a DPT where the service provider has control over the DPT will now be a regulated activity, as will any service of inducing or attempting to induce the buying or selling of any DPT in exchange for any money or any other DPT (whether the same or of a different type).

Giving MAS powers to impose additional requirements on certain DPT service providers

MAS will be granted powers to impose obligations, such as additional user protection measures or any other additional obligations, on certain DPT service providers in subsequent regulations. These regulations may relate to all or any class of persons or payment services, and may make different provisions for different classes.

These potential additional requirements can include (i) anti-commingling measures requiring the segregation of customer assets from the DPT service providers’ own assets, (ii) requirements to ring-fence customer assets, and (iii) the maintenance of customers’ assets and licensee’s assets in a prescribed manner, such as maintaining a certain percentage of such assets in separate cold wallets.

Expanding the scope of regulated cross-border money transfer services

This will now capture transfers facilitated by a Singapore entity between two different offshore jurisdictions; previously, a transfer into or out of Singapore was required.

Expanding the scope of regulated domestic money transfer services

This will now be regulated even where one party to the transaction is a financial institution.

Requirement to use reasonable care to ensure that information provided to MAS is not false or misleading to be extended to non-individuals

This requirement had previously only applied to individuals.

When do these changes come into force?

There is no designated date at the moment. The Bill has been introduced into parliament and will be read a second time on the next available Sitting of Parliament. All Singapore bills must go through three readings in Parliament and receive the President’s assent before it becomes an Act of Parliament or a law.

Who is affected?

Under the proposed changes, those who would be mainly affected include:

  • persons who transfer or arrange for the transfer of DPTs as a service;
  • providers of DPT custody accounts (including wallets);
  • parties that “actively facilitate” DPT Transactions, including entities that provide brokerage or exchange services, or software applications, which enable users to find counterparties and actively match orders for buyers and sellers;
  • cross-border money transfer service providers performing transfers between two non-Singapore jurisdictions; and
  • domestic money transfer service providers performing transfers between a financial institution and a non-financial institution.

What if my organisation previously looked at the how the PSA applied to it or received advice as part of the Payment Regulatory Evaluation Program (“PREP”)?

All companies carrying on business in Singapore must take a view on whether they conduct any of the new activities the Bill now proposes to regulate. Some companies that believe that they are currently exempt under the PSA may conclude that they are no longer exempt once the Bill passes into law. Companies may wish to have any PREP memo refreshed to consider the proposed amendments in the Bill.

What do you need to do if you are affected?

You should evaluate your business model to see if you conduct the newly regulated activities, are required to apply for a licence or expand the scope of your licence.

If you are a DPT service provider, you should monitor the introduction of any conduct of business requirements, user protection measures or additional obligations for DPT service providers. Some of these changes may require changes to your operational model.

Will there be any grandfathering period for affected companies to notify the MAS, or to apply for a licence?

The Bill allows the Minister to set out transitional arrangements but does not set out the detailed arrangements.

MAS has indicated in its Response to Feedback Received on the Consultation Paper (the “Response Paper“) its intention to grant an exemption for six (6) months to entities that will be newly regulated under the amended PSA. MAS also intends to grant an exemption of six (6) months to entities currently licensed under the PSA who have to vary their licence.

What if my organisation is on the list of entities that are granted an exemption by MAS from holding a licence under the PSA (the “Exempt List”)?

Those who are on the Exempt List must take a view on whether they conduct any of the new activities the Bill proposes to now regulate. We note that the exemption period for providing a DPT service ended on 28 July 2020.

Were there any key clarifications in MAS’ response to the consultation?

Some interesting clarifications were made in the Response Paper.

  • In response to feedback asking whether an issuer offering or selling its own DPTs is subject to licensing, MAS noted that “When carrying on a business in Singapore. an entity buying or selling any DPT, including its own DPT, will need to be licensed”, suggesting that licensing requirements may apply to ICOs. (1)
  • In relation to transfer of DPTs, MAS clarified that it is not its regulatory intent to regulate entities or persons that are solely involved in pure technical activities such as blockchain mining, or development of software applications. These entities will not be regulated under the PSA for transmitting or arranging for the transmission of DPTs. (2)

What are some of the questions and open issues that remain?

  • MAS had, in a separate consultation, sought feedback on the scope of e-money and DPTs, and whether these definitions remain appropriate in view of stablecoins. In the Consultation Paper on amendments to the PSA however, MAS made comments recognising “the development of new DPTs, including stablecoins“. This may suggest that MAS is moving towards classifying stablecoins as DPTs rather than as e-money. It may, however, be too early to draw conclusions from these statements.
  • For cross-border money transfer services where both payee and payer are overseas persons, it is still an open question as to whether safeguarding requirements will be extended to cover such licensees carrying out such activities. MAS is expected to carry out further consultations on this. (3)
  • In relation to MAS’ additional powers to impose additional measures on any DPT service provider or any class of the by way of subsidiary legislation, the broadly worded provision gives MAS considerable space for manoeuvre. Regulations can be issued quickly, as they do not require Parliamentary approval, although we note MAS’ comments that should it deem new measures necessary, it will consider the risks and impact of its proposals and intends to consult on the nature of measures to be implemented, as is its usual practice. (4)
  • The exact scope of “inducing or attempting to induce” another into entering or offering to enter into buy or sell arrangements relating to DPTs remains nebulous. This covers a potentially broad range of persons and activities, a point raised by several respondents to the initial Consultation Paper. MAS has clarified that this amendment was intended to scope in activities that involves active facilitation of the buying and selling of DPT for money or other forms of DPTs, including where the entity does not come into possession of the monies or DPTs. While MAS broadly noted that general marketing and advertising activities would not necessarily be caught in scope, this still depends on the facts and circumstances of each case. It is likely that the ambit of this new regulated payment service will only start to take shape over time through enforcement decisions by MAS.
  • In the Response Paper, MAS noted that a respondent had asked about the difference between possession and control of a DPT. MAS provided some clarifications on the concept of “control” being the ability to control access to any DPT or to execute transactions involving the DPT. However, MAS did not define “possession” or distinguish it from “control”. In order to be licensed for the regulated activity of facilitating the exchange of DPTs, a payment service provider must come into possession of money or a DPT. It is not possible to come into physical possession of a DPT because it is an intangible asset. (5)  Therefore, the meaning of “possession” for purposes of the PSA remains unsettled.

With special thanks to Zhan Teng Chua, Trainee Solicitor, for his contribution. 


(1) Response paper [2.1] read with [2.3].
(2) Response Paper [2.9] read with [12].
(3) Response Paper [2.32].
(4) Response Paper [3.9].
(5) See “Making Sense of Virtual Assets”, Kelvin Low (17 December 2015) at (Last accessed 10 December 2020).


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