Crypto exchange

Your business description

Raise funds on a DAO through NFTs and issuing our own coin

Do crypto exchanges need a payment service provider licence to operate in Singapore?

"Digital exchanges providing cryptocurrency-related services would need to obtain a license from MAS and they are also required to take measures such as performing customer due diligence and monitor the transactions. In the event a red flag is raised about a suspicious transaction, the business is required to file a report with the Commercial Affairs Department (CAD)."

Source: Fintechnews Singapore, last revised on 8 Jun 2021

"(2) License: Any person carrying out digital payment token service has to obtain a payment institution license, unless exemptions apply.10 A standard payment institution license applies to companies with payment transactions up to $3million per month and a major payment institution license has to be obtained by companies with payment transactions which exceed $3million per month. An application for both these licenses has to be made by a company incorporated in Singapore or overseas, has its permanent place of business or registered office in Singapore; and has at least one executive director who is a Singapore citizen or a permanent resident or is a person belonging to a class of persons prescribed by the MAS."

Source: Mondaq, last revised on 14 Jan 2021

How has MAS enforced their regulation towards crypto exchanges?

"For example, in 2018, MAS returned funds to the Singapore-based investors of an unnamed initial coin offerings (ICOs), saying it broke the rules by failing to consult MAS before trading what it defines as digital assets.

It also issued a warning to eight crypto exchanges, stipulating that they inform the regulator before trading cryptocurrencies that are considered securities. This has meant that trading cannot commence until they have been appointed as an approved exchange or market operator."

Source: Asia Times, last revised on 10 Oct 2020

How are crypto exchanges regulated in the Cayman Islands?

They may be regulated as "virtual asset trading platforms" under the Virtual Asset (Service Providers) Law, 2020. This requires a licence from the Cayman Islands Monetary Authority (CIMA).

According to CIMA (VASP Law)
last revised 25 May 2020

(2) For the purposes of this Law, “virtual asset trading platform” means a centralized or decentralized digital platform —

(a) which facilitates the exchange of virtual assets for fiat currency or other virtual assets on behalf of third parties for a fee, commission, spread or other benefit; and

(b) which —
(i) holds custody of or controls virtual assets on behalf of its clients to facilitate an exchange; or (ii) purchases virtual assets from a seller when transactions or bids and offers are matched in order to sell them to a buyer,

and includes its owner or operator, but does not include a platform that only provides a forum where sellers and buyers may post bids and offers and a forum where the parties trade in a separate platform or in a peer-to-peer manner.

Registration or licence required
4. (1) Subject to subsections (2) and (3), a person shall not carry on, or purport to carry on, virtual asset service in or from within the Islands unless that person —
(b) in the case of the provision of virtual asset custodial services or the operation of a virtual asset trading platform, holds a virtual asset service licence;