Singapore to Implement Cryptocurrency Regulations by 2024

Singapore, known for its tech-savvy population, has a high adoption rate of 11.05% for cryptocurrencies. The country’s pro-crypto stance has played a significant role in supporting the growth of digital currencies in the region. As one of the early adopters of cryptocurrencies, Singapore has created a crypto-friendly environment with basic regulations in place.

Cryptocurrency is not recognized as legal tender in Singapore, but it can be used as an alternative form of payment. While it is not officially recognized as a currency, cryptocurrency is legal in Singapore, and there are clear regulations surrounding assets like Bitcoin. Singapore has strict anti-money laundering and counter-terrorism financing laws in place.

In 2019, the Payment Services Act (PSA) was passed to clarify the legal status of cryptocurrencies and establish a regulatory framework for Digital Payment Token (DPT) service providers in Singapore. This act introduced a set of regulations for licensing cryptocurrency businesses, with the Monetary Authority of Singapore (MAS) working tirelessly to improve the regulatory framework for DPT services.

Under the PSA, individuals or businesses operating in the crypto realm must obtain a license to operate. The license requirements fall under the Securities and Futures Act (SFA), and MAS has the authority to monitor crypto activities in Singapore. There are three types of licenses that DPT service providers can apply for, depending on their average monthly transactions.

When it comes to taxation, Singapore does not impose capital gains tax or income tax on crypto for individual investors. However, a goods and services tax of 8% may apply to the buying, selling, and trading of cryptocurrencies that are not officially labeled as DPTs. Professional trading and other business activities involving cryptocurrencies are subject to income tax.

Miners in Singapore must pay taxes on their profits. If mining Bitcoin is considered a hobby, gains are not subject to taxation, and mining expenses are not deductible. However, if the miner shows a systematic effort to profit from mining activities, it may be considered a business activity and subject to income tax. Companies that mine crypto and are registered with the Accounting and Corporate Regulatory Authority are also subject to corporate income tax rates.

The Inland Revenue Authority of Singapore (IRAS) provides guidance on crypto tax and how to calculate income related to cryptocurrency trading activities.

In terms of regulations, Singapore has implemented various measures over the years. The MAS clarified its regulatory authority over digital tokens in 2017 and issued notices on preventing money laundering and countering the financing of terrorism. The PSA of 2019 allowed MAS to oversee crypto exchanges and issue licenses. In 2020, goods and services tax no longer applied to cryptocurrencies, and in 2022, Singapore banned crypto service providers from promoting their services in public areas or through third parties.

In 2023, MAS published investor protection measures for DPT services and finalized a stablecoin regulatory framework. The country also announced plans to tighten rules on crypto service providers to protect retail customers. These measures may include barring crypto service providers from accepting locally issued credit card payments and offering incentives to trade in cryptocurrencies.

Overall, Singapore is known for its favorable environment for cryptocurrencies. It continues to adapt to the changing landscape of technology and crypto acceptance, making it an attractive choice for crypto traders.