Broadly, a digital token is a digital representation of the value or rights of the holders of the token to receive a benefit or perform specified functions. The most prominent type of digital tokens is digital payment tokens ("DPTs") (commonly referred to as "cryptocurrency") that can be used to facilitate payment for goods and services.
Depending on the regulatory characterisation of digital tokens, some digital tokens are regulated in Singapore. It is important to note that the Monetary Authority of Singapore ("MAS") has expressed and cautioned that the regulatory characterisation of digital tokens goes beyond the labels.
Definition: DPTs vs. E-money
The provision of DPT services and e-money issuance services in Singapore are regulated under the Payment Services Act 2019 ("PS Act").
DPTs and e-money are, are by their statutory definitions, differentiated given the different nature and features of these products. Under the PS Act, e-money issuance service providers are subject to a wider ambit of requirements as compared to DPT service providers.
Both e-money issuance and DPT services licensees are regulated for money laundering/terrorism financing risks as well as technology and cyber security risks. However, while e-money issuance services providers are also regulated for user protection risks, DPT services providers are not.
Regulatory Characterisation: Is Stablecoin a DPT or E-money?
It would be useful at this juncture to highlight recent regulatory developments and clarifications from MAS regarding stablecoins. Stablecoins is a type of cryptocurrency that is backed by fiat currency, a commodity or a basket of assets, rendering its value to be less volatile than traditional cryptocurrencies. MAS recently clarified that stablecoins are not the same as e-money in the sense that e-money is a digital representation of a currency. Certain stablecoins may fall within the definition of DPTs.
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