Crypto License in Singapore

Singapore is one of the brightest representatives of the Asian economic region. This city-state is nestled off the coast of southeast Asia. It is among the top ten countries in terms of GDP per capita, and its credit rating corresponds to the S&P AAA value, which makes Singapore one of the best locations in the world for doing business. The environment here is particularly attractive for entrepreneurs looking to work in the IT, fintech and blockchain sectors. The local government saw the prospect of cryptocurrencies, so it introduced the institution of licensing of institutions that act as exchangers, exchanges, etc.. As a result, the license for cryptocurrency in Singapore began to massively attract investors and entrepreneurs determined to develop their own startup. Today, having such a license opens up the possibility of developing the Japanese, Chinese market, as well as the entire Southeast Asia.

It is quite easy to start your own business in the cryptocurrency sector in Singapore. This is confirmed by the 3rd line occupied by Singapore in the ranking on the ease of doing business. At the same time, strict legislation ensures the creation of a transparent and fair working environment for each operator of the digital market. To make the work of companies even more comfortable, the laws are constantly being updated, thus following the current trends.

Overview of the Republic of Singapore

Singapore is a city-state located in the heart of Southeast Asia. Known for its rapid economic growth, modern technology, and rich cultural heritage, this small country has become one of the most influential financial centers in the world.

Despite its small area, Singapore consists of a main island and 63 smaller ones and has a high population density of 5.45 million. It is a multicultural society where the Chinese, Malays, Indians, and other nationalities coexist peacefully. The official languages are Malay, English, Tamil, and Mandarin Chinese.

As one of the Asian Tigers, Singapore has one of the strongest economies in the world. With a GDP of $397 billion, the country is considered one of the richest. The port is one of the busiest on the planet, and the development of financial services, electronics, and biotechnology only enhances the country’s international reputation.

As a “Smart Nation”, Singapore is actively developing the digital economy, creating a favorable environment for innovation, in particular in the field of blockchain technologies and cryptocurrencies.

The country has a favorable regulatory climate that encourages financial innovation. The Monetary Authority of Singapore (MAS) is actively working on developing a regulatory framework for crypto assets. Singapore’s strategic location, developed infrastructure, and high level of education and quality of life make it an attractive destination for companies operating in the cryptocurrency sector.

Benefits of registering a crypto license in Singapore

Singapore is often referred to as the Asian haven for blockchain startups. Also, this city-state is one of the financial centers of the planet. Obtaining a crypto license in Singapore provides businesses working with crypto assets with a variety of benefits.

Reputation

Singapore is a favorable reputational destination for any business activity. The country has a stable economy and well-designed cryptocurrency legislation. With globally prevalent severe restrictions and bias towards blockchain projects, the Asian city-state is becoming a desirable destination for many investors and crypto-enthusiasts. Companies legalized in this jurisdiction can count on the trust of investors, clients, banks and counterparties. Crypto market participants treat a company registered in Singapore in the same way as if it were registered somewhere in the EU or the US.

Prospects and opportunities

Singapore has strong trade links with the entire world, so it is seen as an ideal place to develop large markets. The local government is keen not only to regulate cryptocurrency activities but also to create an ideal environment for the development of this sector. The launch of various funds and government initiatives aims to attract as much investment as possible into the country and the best minds from around the world. As a result, it creates a promising platform for crypto projects that have a rapidly growing market and vast opportunities at their disposal. Compared to crypto licenses in other countries, Singapore’s crypto permit allows it to offer a diverse range of services. Companies here are able to conduct transactions with traditional fiat and cryptocurrencies. This expands opportunities for the business as a whole, providing it with such valuable flexibility.

Favorable taxation

A license to trade cryptocurrency in Singapore allows you to become a participant in a comfortable taxation system. Thus, many crypto investors are attracted by the absence of tax on profits earned outside the country. There is also no tax on dividends, and relatively low income tax rates are applied. All of this together contributes to easing the tax burden and increasing the profitability of the business.

Clear legislation and efficient brokers

Thanks to a transparent and stable legal framework, running a crypto business in Singapore is not marred by high risks. Clear legal regulation of cryptocurrencies makes the process of starting a business and its subsequent management much easier than in most European jurisdictions. This is also facilitated by the high efficiency of crypto license brokers, who provide not only consulting services, but also full support of the licensing process.

Support from the Monetary Authority of Singapore (MAS)

Obtaining a crypto license in Singapore issued by the Monetary Authority of Singapore (MAS) provides companies with significant advantages. MAS not only regulates the market, but also actively promotes its development. Licensed companies can rely on clear rules, increased investor confidence, support for innovation, access to a large Asian market, and the opportunity to cooperate with traditional financial institutions. Finally, adherence to the high standards set by MAS guarantees consumer protection and promotes international recognition.

The process of obtaining a crypto license in Singapore

Licensing differs slightly depending on the type of activity chosen, but it is still possible to highlight the general stages of obtaining a Singapore crypto license.

Opening a company

It is possible to register a company in Singapore or abroad, but in this case you need to have a local branch. A mandatory condition for opening a legal entity is the presence of a registered office in the country, as well as a minimum of one resident director. In addition, it is necessary to:

• Provide an AML/KYC compliance policy.
• Have experience in financial management.
• Hire a chairman, chief executive officer (CEO), and board members.
• Contribute authorized capital.
• Hire an AML manager with local citizenship.

In addition, you will need to develop a detailed business plan that outlines the company’s strategy and business model, expected profits, expenses and marketing operational plans.

Preparing a complete set of documents

In order to register a crypto license in Singapore, you need to allocate time to collect and prepare the following documents in proper form:

• AML/KYC policy – describes the process of how the company is going to identify customers to prevent financial crimes and money laundering.
• Internal Policy – describes the process of regulating cryptocurrency operations, i.e. you need to tell the Regulator how transactions will be processed, customer data security will be maintained, what risk management is planned, etc.
• Risk assessment and mitigation measures – should be based on market monitoring, identification of possible threats and development of effective strategies to prevent likely problems.
• Information about the management and structure of the company – information about professional experience, role in the team of key members, etc.
• Confirming the existence of sufficient authorized capital.

You may also be required to provide certain other certificates, statements and other documents that will help the Regulator to make an accurate assessment of your company. These may include incorporation documents, financial statements, agreements with banks, etc.

Applying for and obtaining cryptocurrency authorization in Singapore

The stage is represented by a direct application to MAS with a completed application form and a prepared package of documents. Depending on the chosen type of activity, payment of the state duty is made. Verification of the application and the submitted package of documents takes up to 12 months. But, as statistics shows, up to 70% of applicants receive approval in the first 3 months.

After obtaining a Singapore crypto exchange license, the company is considered a full-fledged participant of the cryptocurrency market. Now, in addition to the opportunities that open up, the company must meet all the requirements for maintaining this license. Otherwise, there is a risk of its revocation.

Banking requirements for opening a crypto company account in Singapore

To open an offshore account in Singapore, it is mandatory to provide details of 2 account stewards – the customer (company owner) and the local director. Other requirements:

• Presence of good reputation of both the legal entity, directors, founders. For verification, the bank is interested in previous business operations and whether they complied with the standards, norms or current legislation.
• A detailed business plan, the study of which allows the banking institution to understand how financially stable and promising the company is.
• Compliance with AML/KYC requirements – the bank checks both the applicant and the policy of the company for which it is necessary to open a corporate account.
• Confirmation of the legal entity’s legitimacy – the list of important documentation includes founding acts, license for crypto exchanger in Singapore, agreements with counterparties, partners, etc.
• The ability of the company to fulfill its financial obligations, for which a certificate of income, expenses, balance sheets, etc. is provided.

An initial deposit is also required, the amount of which can vary between $1000-100000 Singapore dollars depending on the bank. The account can only be opened with the personal presence of the directors and authorized signatories.

Cost of Obtaining a Crypto License in Singapore

Obtaining a crypto license in Singapore is a complex process that requires a significant investment of time and financial resources. The cost of such a license includes the registration of a company, opening a bank account, the services of a nominee director, office rent, and payment of duties. In addition, it varies significantly depending on:

• Type of license. Different types of licenses (e.g., for cryptocurrency exchange, storage, ICO services, etc.) have different requirements and, accordingly, different costs.
• Company size. Larger companies with a significant volume of operations need to invest more in compliance with regulatory requirements and, therefore, spend more on obtaining a crypto exchange license in Singapore.
• Complexity of the business model. The more complex a company’s business model is, the more time and resources are required to develop control systems and procedures, which affects the overall cost.
• Regulatory fees. Government fees for application and Singapore mas crypto license processing are also part of the total cost and vary depending on the type of activity chosen (e.g., crypto exchange, ICO platform).

In addition to the direct costs of application and regulatory fees, companies should consider the costs of:

• Legal advice. The cost of legal services varies depending on the complexity of the process and the experience of the specialist.
• Audit services. An independent audit is mandatory for many types of licenses. However, its cost is variable, as it depends on the scope of the auditor’s work.

Each project is unique, so the exact Singapore crypto license cost is determined individually after a detailed analysis of the client’s requirements.

It is important to note that Singapore offers different types of crypto licenses, each of which has its own specific requirements and cost. For example, the Digital Payment Token Service Provider License has stricter capital requirements and internal procedures than the Custodian License.

Therefore, before starting the process of obtaining a license, companies are advised to familiarize themselves with all the requirements of the regulator and consult with experts in this field.

Who can get a cryptocurrency license in Singapore

The Monetary Authority (MAS) under the Payment Services Act 2020 (PSA) makes it mandatory to obtain a crypto license in Singapore for all companies that plan to engage in:

• Cryptocurrency trading, namely buying or selling crypto in exchange for fiat or other types of cryptocurrencies. This category of activity does not include facilitating the exchange or use of crypto as a means of payment for goods, services.
• Facilitating the exchange of crypto, which means operating an exchange – a place where offers to buy and sell cryptocurrencies in exchange for traditional or cryptocurrency assets are made on a regular and centralized basis.
• Transferring cryptocurrency assets between accounts for the purpose of permanent transfer.
• Fulfilling a client’s instruction related to cryptocurrency, provided that the provider can control that crypto.
• Inducing or attempting to induce another person to enter into an agreement to buy/sell cryptocurrency in exchange for money or other forms of crypto.

Entrepreneurs wishing to provide these and certain other services must obtain a cryptocurrency license in Singapore. This does not apply to licensed banks, merchant banks, finance companies and those holding a license to issue credit, payment cards.

Requirements for Cryptocurrency Exchange License in Singapore

Singapore is attracting more and more companies wishing to obtain a crypto exchange license. However, the high competition and strict regulatory requirements make this process quite complicated.

To successfully pass the licensing procedure, companies must comply with a number of criteria set by the Monetary Authority of Singapore (MAS).

Obtaining a crypto exchange license in Singapore is a serious step that requires companies to invest significant time, resources, and adhere to high standards. However, successful licensing opens a window to a promising market in this country and increases investor confidence.

About the types of crypto licenses available in Singapore

The PSA Act clearly regulates companies planning to launch a crypto business in Singapore. They must obtain one of the two available licenses – SPI (Standard payment institution) or MPI (Major payment institution). Although the procedure is identical for the two types of licenses, the requirements and opportunities they offer are slightly different. It should be noted that a company can apply for both licenses at once, but only if it is registered in Singapore or, if registered overseas, has a permanent presence in Singapore and has at least one resident director.

Features of Standard payment institution (SPI)

SPI is a crypto license in Singapore, which should be obtained by a company that plans to carry out transactions in small volumes and with low risk for users. Generally, it refers to the amount of payment transactions not exceeding S$3 million per month for a single payment transaction, or up to S$6 million in the case of two or more payment services. The Standard License requires the holder to deposit a share capital of S$100,000 or more, and there is no security deposit requirement. There is a S$1,000 government fee to be paid when applying for this license.

With the SPI license, it is allowed to engage in:

• Digital tokenization activities.
• E-money issuance and money transfers within the jurisdiction.
• International remittances.
• Payment processing.
• Creation of electronic wallets.

Features of Major payment institution

This authorization option is issued to large companies with large transaction volumes and high risk levels. It is obligatory to deposit authorized capital in the amount of $250,000 Singapore dollars. There are also requirements for the size of the security deposit – 200 000 Singapore dollars. But unlike the previous type of license, MRI does not provide any limits on operations. The amount of the state fee for registration is $1,500 Singapore dollars.

Principal Payment Service Provider License

For companies planning to scale up their financial services activities and make high-volume payments, a main payment service provider license is required. Obtaining such a license is a serious step that requires an appropriate level of financial strength and compliance with strict regulatory requirements.

As a result, companies that successfully pass the licensing procedure will be able to provide a wide range of financial services, such as international transfers, issuing electronic money, and others. At the same time, the license holders assume responsibility for the security of customer funds and compliance with strict legal requirements and transparency standards.

Money Transfer License

The cryptocurrency industry is closely intertwined with traditional financial services. And companies that work with virtual currencies may face the need to obtain a traditional license to conduct money transfers. This is especially true for platforms that provide fiat currency exchange services for cryptocurrencies or vice versa. Such transactions are subject to money transfer legislation and require appropriate regulatory approval. This once again confirms that the regulation of the cryptocurrency market in Singapore requires a comprehensive approach.

Legislative aspect

Singapore is known for its openness to innovation, so effective regulation of the cryptocurrency sphere has become an important task for the local government. Currently, Singapore’s legislation in the virtual asset sector is considered to be one of the most advanced.

Payment Services Act (PSA)

This law, which came into effect in early 2020, regulates the entire field of payments and exchanges conducted with both fiat and cryptocurrency assets. It is the PSA that served as the basis for the Singapore crypto exchange anti-money laundering licensing that all cryptocurrency operators must comply with.

The text of the PSA uses the term “digital payment token” (DPT) in relation to virtual currencies. In doing so, it makes it mandatory for all companies that engage in DPT services to obtain a cryptocurrency license in Singapore.

Securities and Futures Act

The Singaporean Securities and Futures Act (SFA) regulates crypto assets when they fall within the definition of “securities”. This happens when a cryptocurrency gives the holder rights similar to those of a shareholder or debt holder. It also happens when crypto assets gain their value in transactions where they are used as commodities or financial instruments. In order to deal with such crypto assets, a legal entity must issue a token prospectus, which must then be registered with the Monetary Authority of Singapore. At the same time, a Singapore Capital Markets Services License (CMSL) will be required.

Licensing fees

To obtain a payment institution license, you must pay a one-time application fee and annual fees. The amount of these fees depends on the type of license and any subsequent amendments to it.

• A standard license costs SGD 1000 for the application and approximately SGD 5 annually.
• A Major license costs SGD 1500 for the application and approximately SGD 10 per year.

If you wish to extend your existing license by adding a DPT, the application fee and annual fees will be the same as for the initial license type.

Let’s summarize the difference in cost for different types of licenses and operations in the table below.

It is worth noting that the amount of these fees may change over time in line with changes in legislation and regulatory requirements. Therefore, companies are advised to regularly monitor the latest information on licensing and consult with specialists.

Taxes on cryptocurrency in Singapore

When deciding to apply for a license to exchange cryptocurrencies in Singapore, you should know that regulation of transactions with digital assets is handled by the Monetary Authority, and taxation – the fiscal regulator IRAS, which applies two types of taxes:

• Goods and Services Tax (GST) – with a rate of 7%, applies to bitcoin and other altcoins if they are used to paying for goods or services. From 2020, no GST tax applies when cryptocurrency is involved in transactions as a medium of exchange.
• Corporate tax – 17% of the amount of transactions (buying, selling, mining, exchanging for fiat funds.). Payment of income tax is waived if the company has received tokens on a no-fee basis or as a result of hard forks. Also, income tax is waived for businesses that make dividend payments overseas.

Why it is worthwhile to contact Lawrange

Licensing of a cryptocurrency exchange in Singapore takes place strictly within the framework of the current legislation and therefore requires a responsible approach on the part of the applicant. Singapore’s laws in matters of regulation of the cryptocurrency sphere are constantly improving, so you should be prepared for a rather complicated and lengthy process of obtaining a license.  Preparation of all necessary documents and consideration of your application by the Regulator may take from several months to 1 year. Professional legal assistance in this case greatly facilitates the licensing process. Experienced and qualified specialists of Lawrange attorney’s association take care of all preparatory and organizational aspects, freeing you from unnecessary worries and waste of time.

Cooperation with us opens access to the following advantages:

• Efficiency – trained staff and modern material and technical base allow us to solve the issue of obtaining a crypto exchange license in Singapore much faster than if you tried to do it yourself.
• Responsibility and professionalism – we always stay abreast of any, even the slightest, changes in the legislation of Singapore while being personally responsible for the result.
• Honesty and accessibility – we provide only those services that will be necessary to achieve your goal. At the same time, we always stay in touch with our clients, even on weekends and public holidays.

Conclusions

Those who are in search of a truly profitable place to conduct cryptocurrency detailing, we recommend paying attention to Singapore. A crypto license obtained in this jurisdiction will provide your company with the opportunity to conduct legal business, as well as a prestigious status, access to a favorable tax system and a powerful Asian market. Singapore’s legislation on cryptocurrency regulation is considered a role model, while it is constantly adapting to modern conditions. When applying for a cryptocurrency license here, it is important to comply with a number of requirements and be prepared for an excessively lengthy process. For this reason, it is recommended to enlist the support of specialists from Lawrange S.A., who are familiar with all the legislative and other nuances of licensing.

FAQ

Is it possible to extend or renew a crypto license in the future?

In addition to the possibility to carry out a specific type of activity in the territory of this jurisdiction, you can not only extend, but also update the obtained crypto license in case, for example, you decide to expand the list of services provided.

What are the main criteria for evaluating applications for crypto licenses in Singapore?

First, the Regulator pays attention to the business plan, AML/KYC documents, and information about the owner and management of the company.

How much does it cost to obtain a license?

Crypto License in Singapore, in addition to payment of the state fee of 1000 or 1500 Singapore dollars (depending on the type of crypto company’s activity), implies payment of the authorized capital. Separately pay for the services of our law firm, the list of which, among other things, includes the registration of an office, opening a bank account, etc. For more detailed information, we recommend contacting our specialists in a convenient way for you.

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