Singapore’s Monetary Authority (MAS) has raised the risk level for cryptocurrency exchange platforms from medium-low to medium-high under an update to the country’s Terrorism Financing laws.
Singapore has increased the risk level for cryptocurrency exchange platforms
On July 1, the MAS issued an update to the country’s Terrorism Financing National Risk Assessment and National Strategy for Countering the Financing of Terrorism. The update is aimed at preventing terrorist groups and organizations from exploiting Singapore’s economic openness as an international financial, business, and transport hub for terrorism financing purposes.
Under the new update, cryptocurrency exchange platforms known as Digital Payment Token (DPT) service providers have been elevated from medium-low to medium-high risk. Cross-border online payments remain at high risk, as they are identified as a potential new channel for terrorism financing activities.
The decision to increase the risk level for cryptocurrency platforms comes after a recent report highlighted digital payment tokens as high-risk.
According to Singapore’s updated Money Laundering National Risk Assessment, DPT service providers pose serious risks and vulnerabilities in the context of Anti-Money Laundering.
Key findings of the MLNRA in the AML landscape. Source: Ministry of Finance, Singapore
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Singapore is leading the way in cryptocurrency regulations.
The MAS has been actively involved in regulating the digital asset market under the country’s existing regulations. The latest update regarding cryptocurrency platforms comes a couple of months after the MAS expanded the scope of regulated payment services to include digital token services providers, bringing digital assets under the user protection law.
This law allowed the MAS to impose stricter requirements relating to Anti-Money Laundering and Countering the Financing of Terrorism, user protection, and financial stability on DPT service providers. It also enabled DPTs to provide custodial services and allowed them to offer cryptocurrency transfer services within and across the country.
Singapore is considered one of the most crypto-friendly nations with a high adoption rate. While the global cryptocurrency ownership rate is around 4.2%, Singapore boasts an adoption rate of 11.2%. Under Singapore regulations, digital currencies are known as digital payment tokens (DPTs).
The MAS has recognized Bitcoin (BTC) and Ether (ETH) as cryptocurrencies, giving them the same status as other asset types in Singapore as legal assets.
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