Regulation
Singapore Strengthens AML Regulations for Cryptocurrency Exchanges
Singapore has strengthened its regulatory framework against money laundering and terrorist financing, particularly in the context of cryptocurrency exchanges.
This initiative underscores the nation’s commitment to preserving a safe and reliable financial ecosystem.
As part of this initiative, the Monetary Authority of Singapore (MAS) has updated its national terrorist financing risk assessment. The latest assessment raises the risk level for cryptocurrency exchanges from medium-low to medium-high. This measure is designed to prevent criminal and terrorist entities from abusing Singapore’s open economy.
In line with the revised regulations, cross-border online payments continue to be classified as high risk, due to their potential to facilitate illicit activity. The update is to strengthen oversight against the exploitation of Singapore’s status as an international financial, trade and transport hub.
Impact on cryptocurrency platforms
The increased scrutiny presents a new challenge for cryptocurrency platforms, coming shortly after a previous report identified digital payment tokens as high risk. The MAS’s updated national money laundering assessment highlights the substantial risks associated with digital payment token (DPT) service providers.
In response, the MAS expanded regulatory oversight of digital payment services to include DPT providers. This expansion allows for the imposition of stronger anti-money laundering (AML) and counter-terrorist financing (CFT) measures, thereby ensuring user protection and financial stability. The regulations now allow DPTs to offer custody and transfer services for cryptocurrencies, reinforcing Singapore’s commitment to a safe financial sector.
Singapore has emerged as a key player in the global cryptocurrency ecosystem due to its progressive regulatory stance and supportive environment for fintech innovation. The country’s regulatory framework for digital assets is among the most comprehensive in the world, which has attracted numerous cryptocurrency exchanges and fintech companies to establish their operations in Singapore. This enabling environment has made Singapore a significant hub for digital assets, promoting both innovation and regulatory compliance.
Despite tightening regulation, Singapore maintains its position as pro-cryptocurrency nationwith an above-average adoption rate of 11.2% compared to the global rate of 4.2%. In Singapore, digital currencies are recognized as digital payment tokens, with Bitcoin and Ether officially recognized as fiat tokens.
Chinese AI Startups Move to Singapore Amid Geopolitical Tensions
Meanwhile, Chinese AI startups are increasingly choosing Singapore as a base for global expansion. This trend is driven by the need to circumvent rising geopolitical tensions between China and the United States, which have limited access to funding and advanced technologies.
Moving to Singapore offers these startups broader market access and easier international funding, facilitated by a more favorable regulatory environment. This strategy, often referred to as “Singapore-washing,” allows companies to distance themselves from their Chinese origins and avoid scrutiny from countries critical of China.
Singapore’s favorable business environment and strategic location as a bridge between Asian and global markets have made it an attractive destination for Chinese AI companies. By the end of 2023, Singapore had become home to over 1,100 AI startups, many of them from China, demonstrating a significant shift in the global technology landscape.