“The Act provides regulatory certainty to industry players,” said Luno’s Goh. “More importantly, it gives consumers a clear sense of the players they can trust, ensuring they are in a position to make informed choices of the companies who will safeguard their funds.”
A necessary move
Lawyers that we spoke to believe the PSA was a necessary regulation. Not only did it plug loopholes in the old Money-Changing and Remittance Businesses Act 1979, which did not govern e-wallets and cryptocurrency exchanges, but it brings the law into this century, by addressing the entire chain of electronic payments.
“The [new] Act has been positioned in trying to update the legislation and to bring it under one roof,” said Pinsent’s Tan.
London-based fintech company Revolut sees the PSA as encouraging innovation and growth of e-payments services in Singapore. “Revolut views the Act as timely as it provides regulatory certainty over a number of different activities,” said Eddie Lee, regional director of operations, Asia Pacific, Revolut. “At the same time, it strengthens consumer protection and promotes confidence in the use of e-payments.”
E-payments Services Act’s major changes
Licences
E-payments companies can be licensed as a major or standard payment institution
Transaction limits
Fintech companies can only store S$5,000 in a wallet at any time. There’s also a S$30,000 annual transaction limit
ATM withdrawals
Fintech companies cannot allow customers to withdraw money directly from their account via ATMs
Cryptocurrency exchanges have now gained a semblance of legitimacy by being licensed under the Act. Before the PSA, cryptocurrency exchanges walked a fine line, as the Monetary Authority of Singapore kept a close eye to ensure that digital tokens did not constitute securities. These exchanges worked with no real formal regulation on operating their business in Singapore.
The clarity of the PSA has been lauded by many, with transparency being the key that will help these licensed startups attract investors, according to Stefanie Yuen Thio, joint managing director, TSMP Law Corporation. “Third parties also have the benefit of knowing that the ecosystem has rigorous regulatory oversight,” she said.
Singapore is one of the latecomers to the licensing game in the fintech sector. In Malaysia and Thailand, e-payments startups and cryptocurrency exchanges have been licensed since 2019. The Philippines has regulated e-wallets since 2009 and crypto exchanges since 2017.
Lucky winners
It’s easy to see that crypto startups are one of the biggest beneficiaries of the PSA. Being licensed will not only bring them legitimacy, but also allow them to open and maintain bank accounts in Singapore. In 2017, Singapore banks closed the accounts of several cryptocurrency and payments services companies, without providing a reason. “Being regulated under PSA, banks should not be able to refuse you an account,” said Golden Gate Ventures’ Drijkoningen.
Luno’s Goh believes the PSA is the herald for more countries to make such frameworks if it still doesn’t exist, or refine them if they do. Ultimately this will lead to a boost in customer trust and confidence in licensed operators. Luno’s credibility propelled after it attained a licence in Malaysia, not just with partners and customers in the country but in other Southeast Asian markets as well.