Crypto License in Singapore
Singapore is one of the most crypto-friendly jurisdictions in the world. The national regulator is constantly improving the rules and providing clarifications on licensing cryptocurrency exchanges. Gofaizen & Sherle specialists are ready to help in registering a cryptocurrency company and obtaining a cryptocurrency license in Singapore.
Singapore is a parliamentary republic and a major financial center in Southeast Asia. It is known for its developed market economy and business-friendly climate, which attracts businesses from various regulated industries. Especially in the fields of finance, cryptocurrency, and payments, companies tend to operate in Singapore.
Singapore is a prestigious international financial services center, widely respected and recognized. This country is known for its low tax regime for both local and offshore companies, as well as its sensible approach to regulating fees.
Currently, Singapore is one of the few jurisdictions where cryptocurrency exchanges are directly regulated by law. From 2014-2018, the National Regulator (MAS) issued clarifications and expressed its position on cryptocurrencies, ICOs, and licensing of cryptocurrency exchanges in Singapore. However, in 2019, a new law, known as the Payment Service Act 2019, was passed that requires companies exchanging cryptocurrencies for other cryptocurrencies or fiat funds to obtain a Small Payment Institution or Major Payment Institution license.
Cryptocurrency exchanges act as intermediaries in the exchange of virtual currencies and fiat funds. It is important to note that if a cryptocurrency exchange begins to provide services for buying and selling tokens, which fall under the regulation of securities, it is necessary to obtain a license for a full-fledged stock exchange.
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Advantages of obtaining a cryptocurrency license in Singapore
Getting a cryptocurrency license in Singapore offers several advantages:
- Reputation and credibility. Singapore is a major financial center with global recognition and respect. Getting a license in this jurisdiction enhances the reputation of your cryptocurrency company and inspires trust with customers and partners.
- Regulation and Transparency. Singapore regulates cryptocurrency companies to ensure that transactions are legal and transparent. The national regulator provides clear rules and guidelines to help comply with relevant regulatory requirements.
- Favorable business climate and innovative environment. A stable economy, efficient infrastructure, support, and development of technology and innovation, including blockchain and cryptocurrencies, make Singapore an attractive place to do cryptocurrency business.
- Low-income tax, no VAT on cryptocurrencies, and zero (0%) tax on offshore profits.
- Access to international markets. Because of its status as an international financial center, Singapore provides access to global markets. On the other hand, Singapore actively cooperates with other countries and regulators in the field of cryptocurrency and fintech. This opens up additional opportunities to expand your activities and establish partnerships.
- However, it should be noted that obtaining a cryptocurrency license in Singapore involves meeting certain requirements and standards, as well as going through the registration and compliance assessment process.
Requirements for Obtaining a Crypto License in Singapore
To obtain a cryptocurrency license in Singapore, a company must meet the following requirements:
- Be registered in Singapore as a legal entity;
- Confirm the existence of an office in Singapore;
- Have at least one Singapore-resident director;
- Implement a risk management system specialized for cryptocurrency activities;
- Develop and strictly enforce fair and transparent rules for a token listing on the exchange;
- To create an information base on transactions made;
- Timely notify the regulator of all changes related to the operation of the exchange;
- Comply with anti-money laundering laws, privacy rules, and other relevant regulations.
The regulator also has specific requirements for crypto company personnel. Mandatory positions are:
- members of the board of directors.
The board of directors shall include:
- an audit committee;
- a nominating committee;
- a conflict resolution committee, and other similar committees.
The company’s executives must meet high ethical standards, have an impeccable reputation, and have appropriate education and experience in the financial field.
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The process and timeline for obtaining a crypto license in Singapore
The process of obtaining a cryptocurrency license in Singapore involves several steps:
- Establishing a private limited company in Singapore and preparing an application for a cryptocurrency license. This includes gathering all necessary documents, preparing a business plan, describing the business model, risk management system, and other required materials. Application preparation time may vary depending on the complexity of the business and the availability of the required documents.
- Submission of an application for a cryptocurrency license to the regulatory authority – the Monetary Authority of Singapore (MAS). The review of the application can take anywhere from a few weeks to a few months. During this time, MAS analyzes the submitted documents, conducts verification, and may request additional information or clarifications.
- Screening and Assessment. During the application review process, MAS verifies the company’s compliance with the requirements and standards set for cryptocurrency operators in Singapore. This includes analysis of financial performance, risk management system, correct documentation, and compliance with legislation.
- Making a decision and obtaining a license. After completing the review and evaluation of the application, MAS decides to grant or deny a cryptocurrency license. If the application is approved, the company receives the corresponding license.
The time it takes to obtain a license depends on the complexity of the application, the completeness of the documentation provided, and other factors. The average time for approval of a cryptocurrency license in Singapore is 6-8 months.
If you are new to the cryptocurrency industry, the legislation in Singapore in this area may seem complicated and confusing. However, the professional advisors at Gofaizen & Sherle are ready to help you understand all aspects of your entrepreneurial business in this jurisdiction. They will be happy to answer all your questions and provide the necessary support.
Overview of Crypto Regulation in Singapore
|Project time frames
|State fee for application
|1 000 USD
|Required share capital
|100 000 USD
|Corporate income tax
|Annual supervision fee
|Local staff member
|AML Officer, Director
|Bank account options
Crypto regulation in Singapore
Singapore was one of the first jurisdictions to introduce state regulation of cryptocurrencies. In general, this city-state is considered a favorable environment for cryptocurrency exchanges and crypto startups. The Singapore Cryptocurrency and Blockchain Industry Association (CBIA) actively supports small and medium-sized businesses in the industry.
Cryptocurrency companies in Singapore are regulated by the Monetary Authority of Singapore (MAS). The main laws regulating the crypto sphere are the Securities and Futures Act (SAF) 2001 and the Payment Services Act 2019, which came into force in early 2020. The latter introduces the concept of “digital payment token” (DPT), and companies wishing to provide related services must be licensed as payment institutions (Small Payment Institutions or Major Payment Institutions).
It is worth noting that cryptocurrency exchange licenses are required only for cryptocurrency exchanges that will act as intermediaries in trading tokens subject to securities laws. Under the Payment Services Act, service providers offering only digital payment tokens issued by a central bank or financial institution for a limited purpose are not required to obtain a license because they are already sufficiently regulated.
Cryptocurrency exchanges must also comply with:
- The Financial Advisers Act (passed in 2001, revised 2020 edition);
- Insurance Act (enacted 1966, revised edition 2021);
- The Trust Company Act (enacted in 2005, revised edition 2020).
The MAS has a strong focus on decentralized finance and has taken a proactive stance on the regulation of the crypto industry in Singapore. In 2022, several recommendations and advisory documents have been published to reduce the risks of money laundering and terrorist financing using digital assets. Further regulatory changes are expected during 2023.
In Singapore, there are licensing fees that crypto companies must pay.
First of all, this is the application fee for a crypto license in Singapore. The cost to apply for a standard payment institution license to provide a digital payment token service is only S$1,000. However, if you want to apply for a large payment institution license for the same service, the fee is S$1,500.
To modify the standard payment institution license with the addition of DPT service, you need to pay S$1,000. At the same time, an application to add DPT service by modifying a major payment institution’s license costs S$1,500.
In addition to the application fees, there are also supervisory fees. Licensees are required to pay annual licensing fees that are commensurate with the type of license and services provided. A licensee who uses payment systems must pay the license fees applicable to the payment services they use. The cost of a standard payment institution license is approximately S$5. When a DPT service is added to a large payment institution’s license, this amount is doubled.
Taxation of crypto activities in Singapore
Currently, there is no special tax category for cryptocurrencies in Singapore. However, taxation depends on the specific situation and activities of the company.
If a company engages in cryptocurrency trading as its core business, profits from such transactions may be taxable as corporate income. The Income Tax Act (1947, 2020 Revision) imposes a low rate (only 17% on net income). Meanwhile, on January 1, 2020, the Internal Revenue Authority of Singapore (IRAS) ruled that the Goods and Services Tax (GST) (the local equivalent of value-added tax) will no longer apply to cryptocurrencies. But if a company offers services related to cryptocurrencies, such as exchanging, storing, or providing payments, these services may be subject to VAT.
Singapore crypto companies can benefit from tax exemptions if certain conditions are met. To be exempt, the company must be a tax resident of Singapore and have a share capital owned by no more than 20 shareholders at the end of the assessment year, with one of the shareholders owning at least 10 percent of the company.
Eligible companies can receive a 75% exemption from taxable income up to $100,000 for the first appraisal year. In addition, they may also receive a 50% exemption on the next $100,000 of income for the assessment years to which the exemption applies.
It’s important to note that specific exemption amounts and conditions are subject to change, so it’s advisable to consult official sources or tax advisors for up-to-date information. More up-to-date information on the taxation of digital tokens in Singapore can be seen in the electronic tax guide published by IRAS in 2022.
There is also no capital gains tax in Singapore, so companies that purchase digital tokens as a long-term investment have no tax liability for capital gains when they are later sold. If the cryptocurrency is used as an investment asset or a personal asset, however, taxation may be different depending on the situation. IRAS has clarified that various factors, including purpose, transaction frequency, and holding period, are considered when determining whether the gain from the sale of digital tokens is a taxable trade or capital gain that is not taxable.
It is important to note that the taxation of cryptocurrency activities in Singapore can vary and depends on the individual circumstances of each case. It is recommended to contact Gofaizen & Sherle’s professional tax advisors who specialize in cryptocurrency taxes in Singapore to get accurate information and advice appropriate for your situation.
FAQ on obtaining a crypto license in Singapore
How much does a crypto license in Singapore cost?
The cost of obtaining a crypto license in Singapore can vary depending on the type of license and services provided. The Monetary Association of Singapore (MAS) sets different fee structures for different types of licensing. The application fee for a license varies from S$1,000 to S$1,500.
Do you need a license to trade cryptocurrency in Singapore?
A license for cryptocurrency exchanges is required only for cryptocurrency exchanges, which will intermediate trading of tokens subject to securities laws. Under the Payment Services Act, service providers offering only digital payment tokens issued by a central bank or financial institution for a limited purpose are not required to obtain a license.
Is crypto regulated in Singapore?
Yes, cryptocurrency is regulated in Singapore. The Monetary Authority of Singapore (MAS) has developed a comprehensive regulatory environment to manage cryptocurrency-related activities and ensure the integrity and stability of the financial system.
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