We are involved in the development and launch of a DeFi NFT gaming project and we are looking to issue tokens as part of our new game, what legal or regulatory considerations are there?
From a Singapore legal perspective, it is important to consider whether the gaming tokens would constitute “digital payment tokens” under the Payment Services Act No. 2 of 2019 (the “PS Act”) and fall within the definition of DPTs under Section 2(1) of the PS Act:
any digital representation of value (other than an excluded digital representation of value) that:-
- is expressed as a unit;
- is not denominated in any currency, and is not pegged by its issuer to any currency;
- is, or is intended to be, a medium of exchange accepted by the public, or a section of the public, as payment for goods or services or for the discharge of a debt;
- can be transferred, stored or traded electronically; and
- satisfies such other characteristics as the Authority may prescribe.
Licensing under the PS Act: If the issued tokens constitute DPTs, a game developer may be required to obtain a Standard Payment Institution licence or a Major Payment Institution licence depending on the quantum of monthly transactions pursuant to the PS Act. Every applicant for such licences under the PS Act must be an incorporated company, not an individual, with its permanent place of business or registered office in Singapore, and at least one executive director who is a Singapore citizen or Permanent Resident.