2022 Fintech Laws and Regulations in Singapore

By Ronald JJ Wong

Singapore as Fintech Hub

Singapore is a conducive hub for fintech businesses to incubate, scale, and set up base to expand into South-East Asia markets.

This is because of the robust and clear laws for corporate financing and investments (including corporate law, investor protection, dispute resolution), progressive fintech laws & regulations and regulatory sandboxes for innovation.

The Singapore Government is highly supportive of innovative startups and businesses, through government grants and taking the lead in facilitating fintech innovations in Singapore and through cross-border collaborations. Business and tech talent is also readily available; also, foreign tech talent is attracted to coming to Singapore.

Further, the strong Singapore brand in terms of government and regulations makes it an attractive proposition to have a regulated fintech business licensed here.

Venture capital (VC) funding and investment in Singapore remain active and strong. Government-linked funds, e.g., Temasek-linked funds, and international VC firms, such as Sequoia Capital, have injected and continue to inject capital.

Legal & Regulatory Framework for Fintech

Apart from legislation governing traditional financial institutions such as banks and funds, fintech businesses may be regulated under the following laws along with the corresponding activities or characteristics.

Activity or Characteristic	Legislation	Examples
Payment & remittance services: Merchant acquisition, Domestic or cross-border money transfer, Payment account issuance, E-money issuance	Payment Services Act 2019 (PSA)	Prepaid payment cards like YouTrip, Revolut. Remittance services like Wise. Digital wallets / payment accounts like GrabPay, ShopeePay. Payment processors like CheckOut. Merchant acquirers / payment gateways like AXS, FomoPay.
Digital tokens / blockchain/ distributed ledger technology (DLT) / crypto: Characteristics of commodities, Securities/capital market products, Utility tokens, Digital payment tokens (DPT) / cryptocurrency, Non-Fungible Tokens (NFTs)	PSA for DPT Financial Services and Markets Act 2022 for virtual asset service providers (VASPs) who provide services outside Singapore Securities and Futures Act 2001 (SFA) regulates securities and derivatives, including leveraged foreign exchange trading and operators of markets of securities and derivatives. SFA regulates: dealing in capital market products, advising on corporate finance, fund management, REIT management, product financing, providing credit rating services and providing custodial services. No specific legislation for NFTs	Crypto exchanges like CoinHako. Crypto payment processor like FOMO Crypto. Crypto trading on Revolut, Sparrow. Security token market operators like ADDX, ECXX.
Robo-advisors / wealth management	SFA Financial Advisers Act 2001 (FAA), which regulates advice on investment product, advising by issuing or promulgating research analyses or reports concerning investment products, and arranging insurance of life policies.	Syfe, Endowus, StashAway, MoneyOwl
Digital securities brokerage platform	SFA	POEMS Tiger Brokers Moomoo
Credit / lending	Moneylenders Act (MLA)
Debt or securities-based crowdfunding	SFA (possibly dealing in capital market products and/or advising on corporate finance) Also, to note prospectus requirements for offer of investments under the SFA and possible prospectus exemptions (small offer, private placement, offer to accredited or institutional investors) FAA (possibly providing financial advice) MLA	Funded Here Funding Societies Fundnel
InsurTech	Insurance Act 1966	Singlife by AVIVA Etiqa Surer
Buy Now Pay Later (BNPL)	Presently not specifically regulated although PSA and/or MLA may apply depending on the specific business model. However, certain members of the BNPL industry have proposed a Code of Conduct to self- regulate BNPL service providers.	Atome ShopBack Grab PayLater Rely Pace
RegTech, security and authentication	No specific legislation.
Receivables financing	No specific legislation, unless moneylending, deposit taking, securities, etc. are involved.
Alternative funds / decentralised organisations with pooled assets or treasury	SFA: such funds or pooling of assets could constitute collective investment schemes (“CIS”). Making offers of units in CIS require prospectus or reliance on prospectus exemptions. Recognition or authorisation of CIS may be required. Management of the CIS could be considered fund management (if it involves capital market products or spot foreign exchange contracts for managing funds), which requires a licence under the SFA.

It should be noted that the regulatory obligations under the SFA and FAA have extraterritorial effects e.g. sections 196, 205, 213, 339 of the SFA and section 90 of the FAA. Thus, if a person does something outside of Singapore which is deemed to be done partly in Singapore and which is prohibited under the regulations without a licence, it would be a breach. Similarly, if an activity done wholly outside Singapore could have a substantial and foreseeable effect in Singapore, it would also be caught. There are also restrictions on solicitation and advertising in Singapore by or for overseas persons.  

Apart from the above, the Personal Data Protection Act 2012 (PDPA) also generally applies with regard to the collection, use and disclosure of personal data. The Monetary Authority of Singapore is also presently looking into regulating stablecoins.

General regulatory risks which are sought to be addressed through the regulatory frameworks include money laundering/terrorism financing (ML/TF) risks, user/consumer protection, interoperability, and technology risks.

For certain fintech business activities, exemptions from licensing could apply depending on whether the requirements are satisfied. In some instances, certain business models may be structured such that it does not fall within the scope of regulation at all.

For businesses that do have to be licensed, corporate structure, expertise, and experience of key personnel, having a dedicated internal compliance function, and robust business policies addressing ML/TF, technology, operational, data protection and user protection risks are important to increase the prospects of obtaining the requisite licence.

Generally, however, even if no specific licence is required for any fintech business activity, anti-ML/TF rules based on Financial Action Task Force (FATF) standards and guidelines would apply. This includes MAS Notices on AML/CFT. Know Your Customer (KYC) and customer due diligence requirements should be stringently satisfied.

MAS offers a Fintech Regulatory Sandbox for first mover or early adopter fintech businesses with novel applications to pilot their business models and applications. For fintech businesses with low-risk activities, they can pilot in the market even more quickly with Sandbox Express. Sandbox Plus also offers grant funding under a Financial Sector Technology and Innovation – Financial Institution (FSTI-FI) Projects track. Eligible applicants may also get onto a platform for deal-making, mentoring, networking and funding opportunities under a collaboration between MAS and Enterprise Singapore, a government agency which champions enterprise development.

We have advised clients on the Fintech Regulatory Sandbox. As an example, one of our clients entered the Sandbox to operate an exchange for security digital tokens. This was at the time a novel fintech business and they were a first mover in this regard, being one of the first few fintech businesses in Singapore to operate such an exchange. We assisted the client with the Sandbox application and to address various legal, regulatory and compliance issues for the client to then graduate from the Sandbox by applying for a full licence to operate the exchange as a Recognised Market Operator (RMO). The client eventually succeeded in obtaining the coveted RMO status from MAS and presently operates two platforms: an exchange for trading cryptocurrency or digital payment tokens; and an exchange for digital tokens which constitute securities and/or collective investment schemes (“CIS”).

We have also advised and are in the midst of advising various clients on developing or operating other fintech businesses such as BNPL platform business, digital securities brokerage platform business, utility token, DPT and NFT issuances, security token structuring and issuances, merchant acquisition and money transfer services, among others.

As such, we have the expertise and experience to partner with and advise businesses that wish to start, expand, develop, or scale their fintech businesses in Singapore.