Fintech In Singapore Today – A Look At The Fintech Regulatory Environment, And What You Need To Know – Fin Tech & More News Here

Amidst a worldwide pandemic that a lot of the international inhabitants
had by no means skilled earlier than, we live by way of a interval of
important change. We have needed to adapt to a lifetime of distant
interplay, transacting with events from the consolation of our personal
properties, and trusting our funds and knowledge to the huge and
limitless world of the web.

All that is solely attainable because of the wave of innovation within the
Fintech house, and Singapore, because the central monetary and enterprise
hub of the area, has seen its fair proportion of Fintech innovation
and exercise. This is partly because of the presence of reliable
digital and bodily infrastructure, its robust monetary trade,
and authorities initiatives and laws which offer stability
whereas encouraging development and innovation.

In this text, we will likely be exploring a number of the initiatives
launched by the Singapore authorities to develop and enhance the
Fintech scene in Singapore, along with legal guidelines which apply, and
had been launched, to create a dependable and reliable trade
setting for each operators and shoppers.

Government initiatives

The Singapore authorities, by way of the Monetary Authority of
Singapore (MAS), Enterprise Singapore and varied
different our bodies, has been extremely supportive of the sector, having
organised varied occasions and initiatives, and launched incentive
schemes and grants to encourage and entice innovators and
entrepreneurs within the house.

Singapore Fintech Festival

The Singapore Fintech Festival is an annual flagship occasion
organised by MAS for the fintech neighborhood, which goals to foster an
open dialogue between the private and non-private sectors to advance
Fintech within the digital financial system. The Singapore Fintech Festival 2021
attracted greater than 60,000 attendees, drawing over 2 million views
on native and worldwide tv networks and social media.
(1)

In addition, Enterprise Singapore and MAS additionally collectively organised
Deal Friday, which contains a sequence of 12 months-lengthy occasions between
buyers and begin-ups that lead as much as the Singapore Fintech
Festival. The individuals who’re shortlisted will likely be supplied
with help resembling pitching workshops and entry to
financiers.

Fintech Regulatory Sandbox

MAS first launched the Fintech Regulatory Sandbox in November
2016 to encourage and allow experimentation of expertise
innovation to ship monetary services and products, by enjoyable
particular authorized and regulatory necessities to permit candidates to
experiment on modern merchandise inside a managed setting
for a restricted time frame. Upon profitable experimentation and
exit of the sandbox, the applicant will then resume full compliance
with the related authorized and regulatory necessities.

In August 2019, MAS launched the Sandbox Express to allow
insurance coverage brokers and market operators a quicker choice to convey
modern monetary providers and merchandise to the marketplace for
testing in pre-outlined environments, which was then adopted by the
Sandbox Plus in November 2021, comprising three enhancements to its
current Fintech Regulatory Sandbox framework. These enhancements
had been:

1.  enlargement of eligibility standards to incorporate early
   adopters of expertise innovation;




2.  streamlined software with monetary grant for first
   movers of expertise innovation(2); and




3.  participation in Deal Fridays,

which aimed to supply a simpler one-cease help for
companies trying to introduce modern monetary providers or
merchandise.

API Exchange (APIX)

APIX is a not-for-revenue initiative of the ASEAN Financial
Innovation Network (AFIN), that was collectively fashioned by MAS, the
World Bank Group’s International Financial Corporation and
the ASEAN Bankers Association which was launched in November 2018
to assist market gamers join with each other, design experiments
collaboratively and deploy new digital options.

On APIX, monetary establishments are in a position to uncover Fintech
answer suppliers and merchandise from a worldwide market, whereas
Fintech companies have the chance and entry to interact monetary
establishments throughout a number of jurisdictions, get found, construct
their profile to facilitate business discussions and pitching to
buyers and entry to ecosystem help together with grants,
hackathons, buyers and different providers.

Grants for Innovation

MAS has additionally partnered up with varied organisations resembling
Startup SG, Singapore Fintech Association, AMTD Foundation,
Enterprise Singapore, GoBusiness Singapore to supply monetary
establishments, begin-ups, or Fintech companies with grants for
innovation, assist defray the prices to rent expertise, and undertake digital
options or AI/information analytics expertise, amongst others.

The MAS Financial Sector Technology and Innovation (FSTI) POC
scheme offers funding help for experimentation, improvement
and dissemination of nascent modern applied sciences within the
monetary providers sector. The grant covers as much as 70% of the
qualifying prices and as much as a cap of S$400,000 and is eligible for
MAS-regulated monetary establishments or expertise/answer
suppliers working with MAS-regulated establishments for the
early-stage improvement of novel options to issues within the
monetary trade.

On 8 April 2020, MAS introduced a S$125 million help bundle
for the monetary and Fintech sectors to take care of the fast
challenges from COVID-19 and place strongly for the restoration and
future development. This help bundle contains:

1.  Training Allowance Grant to supply coaching allowances
   (S$10-15 per hour) for finishing coaching in programs accredited by
   the Institute of Banking and Finance (IBF);




2.  90% course charge subsidies for Singapore residents or
   everlasting residents attending IBF programs;




3.  Wage help for monetary establishments to rent Singapore
   citizen recent graduates or employees from different sectors and place
   them in expertise improvement programmes below the Finance Associate
   Management Scheme;




4.  Digital Acceleration Grant to help digitalisation in
   smaller monetary establishments and Fintech companies;




5.  Six months’ free entry to APIX obtainable to all
   Singapore-based Fintech companies; and




6. Free digital self-evaluation framework to assist Fintech companies
   present a primary-stage assurance in regards to the high quality of their
   options.

In addition, MAS on 13 July 2020 additionally launched a S$6 million
MAS-SFA-AMTD Fintech Solidarity Grant to help Singapore-based
Fintech companies amid the difficult enterprise local weather brought on by
COVID-19 pandemic, comprising:

1.  Business Sustenance Grant which offers (i) wage help
   of as much as S$2,000 a month per native employees and S$1,000 per thirty days per
   native intern for as much as 6 months; and (ii) lease help of as much as
   S$4,000 for as much as 6 months of workplace scape, with an general cap of
   S$20,000; and




2.  Business Growth Grant which helps 70% of the
   qualifying prices associated to the POC on APIX, with an general cap of
   S$80,000 (as much as S$40,000 for first software and as much as S$10,000
   every for the next purposes), and 100% internship funding
   (the place the interns are concerned within the improvement and
   implementation of the POCs) capped at S$1,000 per intern.

Fintech legal guidelines & laws

While the developments within the Fintech trade are encouraging
and thrilling, it’s a huge and limitless house that accommodates as
a lot danger as there may be promise. In the current market, the Fintech
trade affords digital tokens/cryptocurrencies, cryptocurrency
exchanges, cashless and contactless cost service or fund
switch options, digital banking providers, synthetic
intelligence options, and extra, lots of that are made obtainable
to most people. It is subsequently essential to make sure these
providers or merchandise are topic to acceptable regulatory regimes
and/or supervision by the native authories.

Fintech-related legal guidelines

The provision of Fintech providers and merchandise is predominantly
regulated by MAS together with different regulatory authorities.
Nevertheless, there may be presently nobody single laws
regulating Fintech house. Depending on the character and scope of
Fintech providers or merchandise supplied, the next legislations
could also be related:

• Securities and Futures Act 2001
  (SFA)




• Financial Advisers Act 2001




• Banking Act 1970




• Insurance Act 1966




• Payment Services Act 2019 (PSA)




• Moneylenders Act 2008




• Companies Act 1967




• Currency Act 1967




• Commodity Trading Act 1992

Before venturing into Fintech house, the next issues
ought to be thought of having regard to the Fintech providers or
merchandise supplied:

1.  Regulatory and compliance issues – together with any
   prospectus registration necessities for providing capital market
   merchandise; the kind of license, registration and/or exemption
   required from sure authorities, in addition to on-going compliance
   issues that could be relevant to such service or product.




2.  Intellectual property – together with registration and
   safety of mental property rights.




3.  Technology contracts – together with establishing phrases
   of use of service or product; software program or trademark licensing
   contracts.




4.  Data safety – together with implementing techniques
   that deal with private information in compliance with the Personal Data
   Protection Act 2012.




5.  Financings – together with planning for enterprise capital
   investments and/or varied sequence of fundraising workouts for
   future development.

SFA

Under the SFA, ‘dealing in capital markets merchandise’
is a regulated exercise which, typically talking, requires a CMS
license. A cryptocurrency could, relying on its options, fall
inside the definition of a capital markets product, and if
cryptocurrencies supplied on a cryptocurrency alternate are so
characterised, then the cryptocurrency alternate will likely be regulated
as an authorised alternate or recognised market operator below the
SFA, and topic to MAS licensing necessities. The cryptocurrency
alternate may require a capital markets providers licence for
dealing in capital markets merchandise below the SFA and will comply
with prospectus registration necessities for providing of
securities.

If, nonetheless, the cryptocurrencies supplied are characterised as
digital cost tokens (together with the shopping for and promoting or
facilitating exchanges of cryptocurrencies as a way of cost
for the availability of products and providers), then the service supplier
will likely be regulated as an ordinary or main cost establishment
offering digital cost token (DPT) providers
below the PSA, relying on the worth of cost transactions
processed by the cryptocurrency alternate.

PSA

One of the notable Fintech disruptions is the introduction of
cell/cashless or contactless cost service and fund switch, a
service which is topic to the regulatory necessities below the
PSA.

There are 7 varieties of regulated cost providers below PSA:

Regulated Payment Service	Examples
(i) account issuance	e-wallets (together with sure multi-goal saved worth playing cards) or non-financial institution issued bank card
(ii) home cash switch	cost gateway providers, cost kiosk providers or different native funds switch, in any case neither payer nor payee is a monetary establishment
(iii) cross-border cash switch	remittance agent
(iv) service provider acquisition	course of cost transactions for retailers together with level-of-sale terminal or on-line cost gateways
(v) digital cash issuance	issuing e-cash for shoppers to pay retailers or others
(vi) digital cost token	cryptocurrency which isn’t a capital markets product, or platform that enable alternate of DPTs
(vii) cash-altering	moneychangers

For regulated cost providers (aside from cash altering
providers), the service supplier is required to carry both:

• a main cost establishment license for
  offering cost providers which exceed sure prescribed
  thresholds (together with, the place the month-to-month common of all cost
  transactions exceeds S$3 million for one cost service, or S$6
  million for 2 or extra cost providers); or




• a commonplace cost establishment license to
  present a number of cost providers which don’t fall below the
  prescribed thresholds talked about above.

The licensing necessities, together with the kind of authorized entity,
minimal directorship, minimal base capital necessities, annual
licensing charges and safety deposit, fluctuate relying on the kind of
license and cost providers utilized for.

Once the Fintech participant obtains a license below the PSA, it’s
topic to ongoing compliance obligations, together with complying with
audit, cyber hygiene and Anti-Money Laundering and Countering the
Financing of Terrorism (AML/CFT)
necessities.

There are nonetheless carve-outs from licensing below the PSA for
providers that don’t warrant regulation – for examples,
cost transactions carried out by authorised business agent in
respect of the sale or buy of products or providers on behalf of
payer or payee.

On prime of the above licensing necessities, if the providers or
merchandise supplied cross the road of enterprise banking enterprise,
for situations taking deposit or receiving cash on present or
deposit accounts, such providers are topic to licensing and
regulatory regimes below the Banking Act 1970. Likewise, if the
Fintech participant carries on the enterprise of lending cash, it might
additionally require a license below the Moneylenders Act 2008.

AML/CFT

As one of many priorities for MAS, Fintech trade gamers are
topic to the related AML/CFT legal guidelines and necessities in carrying
out their companies. Generally, they must adhere to the
notices and pointers issued by MAS regarding cash laundering
and terrorism financing dangers, and implementing procedures and
controls for the efficient administration of those dangers.

Furthermore, amongst all regulated cost providers, MAS considers
DPT transactions to hold greater cash laundering and terrorism
financing dangers owing to the anonymity, velocity and cross-border
nature of the transactions. DPT service suppliers are required to
put in place sturdy controls to detect and deter the move of
illicit funds and cling to Notice PSN02 on Prevention of Money
Laundering and Countering the Financing of Terrorism –
Digital Payment Token Service and its Guidelines.

On the entire, MAS takes a impartial strategy in administering and
implementing laws with respect to Fintech, whereas managing dangers
appropriately. As lengthy as any Fintech service or product falls
inside the scope of current regulated actions, be it the SFA,
PSA or in any other case, it might have to adjust to the relevant
laws and regulatory regimes.

Overall, the Fintech scene in Singapore represents an thrilling
prospect as the federal government, having recognised its potential,
launched varied initiatives to enhance the trade, whereas at
the identical time putting in varied safeguards to make sure that
everybody can take part in a secure and predictable setting.
Over the course of the following few months, we will likely be rolling out a
sequence of articles, every exploring these concerns in additional
element in respect the varied parts of Fintech, resembling
cryptocurrency, digital banks, insurance coverage tech, and ESG Fintech.

The content material of this text is meant to supply a common
information to the subject material. Specialist recommendation ought to be sought
about your particular circumstances.

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