Paxos and Circle Obtain Regulatory Approval in Singapore
07.02.2023 | 15:25
Paxos and Circle — blockchain infrastructure and USDC issuing platforms respectively — are now officially regulated in Singapore. This decision came after the Monetary Authority of Singapore issued two deliberation papers that proposed the easing of regulatory hurdles for digital asset service providers.
The Monetary Authority of Singapore (MAS) has granted Circle and Paxos a license that allows legal and regulated operations in the country. Paxos received a license to offer digital payment token services, while Circle received in-principle approval for a significant payment institutional license holder, the MAS. This license allows the company to provide digital payment token products such as issuing cryptocurrencies, conducting cross-border payments, and facilitating domestic transactions.
The announcement was made on November 2, 2022, by the duo. According to a notice in the government's official gazette, the MAS conducted a stringent examination before approval of the new license process under Singapore's Payment Service Act (PSA). Paxos and Circle are allowed to provide digital token services under the Major Payment Institution (MPI) license, with compliance requirements to protect consumers. Insiders at Bitcoineer noted that, in December 2021, 100 out of 170 digital payment token firms failed to acquire a license in Singapore. MAS supports crypto and blockchain adoption and recognizes the risks, and it remains to be seen how many more companies will secure the license, just like Paxos and Circle.
In 2019, the Singapore parliament passed the Payment Service Act (PSA), which aims to regulate payment systems and authorizes MAS to oversee the conduct of payment service providers. MAS has updated its regulatory framework for digital payments, including crypto-related activities. PSA covers all crypto exchanges and businesses based in Singapore, which means all crypto activities fall under anti-money laundering and counterterrorist-financing rules. Paxos and Circle will now be able to offer their respective stablecoins and other digital payment token products within Singapore.
About Paxos and Circle
Paxos is a New York-based exchange and stablecoin issuer that offers different products such as crypto trading and settlement and custody services. The firm is also the issuer of the Binance stablecoin (BUSD); it can issue tokenised securities and allow its customers to access the traditional banking system. The licence covers all Paxos services to Singapore residents and clients wishing to operate in Singapore, including its institutional clients PayPal, EDXM, and MasterCard. In March 2022, the company announced that it had received an in-principle license approval as a major payments institution from Singapore. And now it has officially confirmed that the licence has been granted.
Co-founder and CEO of Paxos Asia, Rich Teo, said: "We have been committed to innovating within regulatory frameworks." Teo added, "We are honoured to secure this important licence from MAS. We believe that blockchain and digital assets will revolutionise finance for everyone around the world, but the development of this technology must have clear oversight and consumer protection.
We are excited to have MAS as our regulator. Paxos will safely accelerate consumer adoption of digital assets globally in partnership with the world's biggest enterprise."
Circle is a US-based stablecoin issuer looking to expand its firm and acquire licences. The USD Coin, which Circle issues, is the second largest stablecoin and is available in eight blockchains so far. Circle recently launched EUROC, with a market capitalisation of $77 million. According to the company, it sees itself as powering mainstream payments. Co-founder and CEO of Circle, Jeremy Allaire, noted, "As one of the world's leading financial hubs, Singapore is instrumental to Circle's regional and global expansion in raising global economic prosperity."
According to the chief strategy officer and global Head of Public Policy at Circle, Dante Disparte, the approval is set to open more significant potential for cryptocurrencies and open payment systems to drive economic growth in Singapore under the more innovative-friendly regulatory framework.
The Monetary Authority of Singapore approved a few more regulations for digital asset firms such as Genesis, CryptoCom, and Sparrow earlier this year. Co-founder and CEO of CryptoCom noted, "The MAS sets a high regulatory bar that cultivates innovation while protecting customers, and their in-principle approval of our application reflects the trusted and secure platform we have worked diligently to build." The largest bank in Singapore, DBS, recently revealed that it would expand its crypto trading services to accredited investors who fit the criteria.
Recently, MAS launched a consultation for regulating stablecoin, which will require all users to have sufficient capital to cover at least six months' cost. The Monetary Authority of Singapore recognizes that it has limited influence over multi-jurisdictional stablecoins, so it is considering requiring an annual attestation that the stablecoin in other jurisdictions can meet similar criteria to Singapore's. With that being said, Paxos and Circle have bagged the crypto deal in Singapore; it would be wise for the crypto community to keep an eye on the updates concerning the future of this project.
