In the context of DeFi, is P2P lending regulated under the Moneylenders Act?
"According to the Financial Times, the most popular DeFi applications "have focused on peer-to-peer lending markets underpinned by stablecoins, cryptocurrencies that are largely pegged to fiat currencies such as the US dollar."
P2P lending is not a new activity. In Singapore, much of this takes place over platforms that are regulated by MAS. However, the disintermediation effect of DeFi means lending that is truly – and directly – peer to peer. Such activities may then fall under the Moneylenders Act. This requires any person carrying on the business of moneylending in Singapore to be licensed, unless he is an excluded or exempt moneylender.
Section three of the Moneylenders Act states that any person "who lends a sum of money in consideration of a larger sum being repaid shall be presumed, until the contrary is proved to be a moneylender." However, the legal position is that this presumption is rebuttable, for example by proving that one is not carrying on the business of moneylending. This is why interest may be charged on loans to friends and family that do not require a licence.
The question is whether an individual making a loan (or multiple loans) to strangers on a DeFi platform will be considered as “carrying on the business of moneylending". If so, the definition of an "excluded moneylender" may have to be amended before DeFi lending is widely adopted in Singapore."
Exemption on application
(1) The Minister may, upon the application of any person and the payment of such fees as may be prescribed, issue a certificate to exempt, with or without conditions, any person from all or any of the provisions of this Act.
(2) Every exemption under subsection (1) —
- may in the first instance be valid for a period of 3 years or less from the date of the grant of exemption;
- may, upon payment of the prescribed fee, be extended thereafter, with or without additional conditions, for further periods not exceeding 3 years at a time; and
- need not be published in the Gazette.
The Ministry of Law provides more information on applying for a Moneylender licence and certificate of exemption, and fees applicable here.