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- The Big Read: Cryptocurrency crash offers industry the reality check it needs
- Why Register with Mondaq
- Cryptocurrency Regulations in Singapore | ComplyAdvantage
In July, , MAS proposed the introduction of a new set of regulations to govern the financial sector in Singapore, which will also have impact on the cryptocurrency industry. The intention behind the proposed regulations is to protect Singaporeans from unsuitable entities who can increase the risk associated with crypto businesses and to clamp down on financial crime in the crypto ecosystem. MAS cannot issue prohibition orders to persons regulated under other Acts.
Therefore, the new proposed legislation will allow MAS to issue prohibitory orders against crypto businesses in case of misconduct. Banks ceased doing businesses with cryptocurrencies operators and arbitrarily closed their bank accounts. For instance, Luno, a cryptocurrency exchange which halted its activities in owing to closure of its bank accounts, resumed operations in Singapore towards the end of after its bank accounts were opened. Banking continues to remain a challenge and different banks have different approaches.
Businesses are subjected to extensive diligence before they are offered bank accounts, and many banks will outright decline such privilege to companies that have any touch points with cryptocurrency. The enhanced regulatory powers with MAS may be a cause for concern for crypto businesses and especially start-ups looking for a more flexible penalty regime. This implies that virtual asset service providers will have to ensure that their overseas operations meet the same regulatory standards as their Singapore operations.
MAS has been supportive of crypto start-ups and firms experimenting with cryptocurrency and blockchain technologies. This friendly climate has been a magnet for several big crypto businesses from countries like Australia, Japan and China setting shop in Singapore.
The Big Read: Cryptocurrency crash offers industry the reality check it needs
Major crypto businesses such as Japanese-based Liquid Group Inc. Consumers will also be more comfortable in trusting licensed crypto operators. The Code also promotes best practices, including Know-Your-Customer, to help crypto businesses comply with the new regulatory framework. Section 5 and 6, Payment Services Act, supra note Section 6, Payment Services Act, supra note As defined under Section 2 1 SFA, this includes: a debentures or stocks issued or proposed to be issued by a government; b debentures, stocks or shares issued or proposed to be issued by a corporation or body unincorporated; c any right, option or derivative in respect of any such debentures, stocks or shares; d any right under a contract for differences or under any other contract the purpose or pretended purpose of which is to secure a profit or avoid a loss by reference to fluctuations in - i the value or price of any such debentures, stocks or shares; ii the value or price of any group of any such debentures, stocks or shares; or iii an index of any such debentures, stocks or shares; e any unit in a collective investment scheme; f any unit in a business trust; g any derivative of a unit in a business trust; or h such other product or class of products as the Authority may prescribe.
Sections and , Securities and Futures Act, supra note Section 6, Securities and Futures Act, supra note Section 82, Securities and Futures Act, supra note Section 99, Securities and Futures Act, supra note The content of this article is intended to provide a general guide to the subject matter.
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Singapore government's attitude towards cryptocurrency businesses Singapore offers a balanced regulatory and legal environment for cryptocurrencies. New crypto regulation and licensing regime in Singapore Payment Services Act, In January , the Payment Services Act PSA came into effect to regulate traditional as well as cryptocurrency payments and exchanges.
We discuss a few relevant provisions below: 1 Digital payments token : The PSA uses the term "digital payments token" to refer to virtual currencies and defines it as any digital representation of value that: a. Footnotes 1. Kruthi Venkatesh. Anirudh Rastogi. Singapore Technology Fin Tech. In January , India's cryptocurrency investors and enthusiasts were shocked when the Lok Sabha Bulletin indicated that the Indian Parliament is considering the introduction of the The use of cryptocurrency has always been a point of contention with its legality being a mystery to public.
ANB Legal. In the era where technological advancements are happening at an exponential rate, the Fintech sector has found itself at the forefront of this boom. Bitcoin enables peer-to-peer transactions, facilitating payments directly, and not via a bank or financial institution. Is your business protected? Cyber security risks and the need for ongoing vigilance in and beyond McCullough Robertson. As a result, it also held that Quoine was in breach of trust. A subsequent hearing on the question of the amount of damages was ordered, if damages could not be agreed between the parties.
For the purposes of this briefing, we will focus only on the following key novel points raised in the case. Did these have contractual effect? That assumption is consistent with earlier authority that did specifically address the issue. The broker would input the details for the required insurance product into the system, and the system would calculate quotes available from insurers participating in the system and determine whether the risk was acceptable to the relevant insurer without referring the issue back to the insurer.
Once the customer accepted the price and terms of insurance cover, the policy contract was generated by the system and the insurer was bound by it. The system then produced the necessary paperwork. The relevant data is, therefore, processed automatically by electronic means through the computer software, and the transactions are self-executing within the specified parameters pre-determined in the programme. Drawing an analogy with Thornton v Shoe Lane Parking [] 2 QB , in which an English court held that a ticket vending machine was an offer, the court said:.
Once the broker, like the plaintiff in Thornton putting his money into the machine, has input the necessary data into the electronic process, no further human intervention is necessary for the formation of a binding contract between broker and insurer. Such reasoning will be important when considering, for example, whether new technologies, such as smart contracts operating on blockchains, can have legally binding contractual effect when they act automatically or even autonomously in purporting to bring parties together into contractual relations. The Singaporean High Court observed that:.
The defendant programmed the software. In other words, the pre-determined program logic should simply be equated with the actions of the party that put it in motion.
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This view is also reflected in B2C2 Ltd v Quoine Pte Ltd where Thorley IJ decided that, when the law is faced with a contention that a contract made by and between two computer systems acting as programmed but otherwise without human intervention is void or voidable for mistake, it is necessary to have regard to the mindset of the programmer when the relevant programs were written , not at the later time when contracts were entered into. The Platform was different from, say, the operator of a kitchen blender, where a person causes the machine to work and where knowledge should therefore be determined at the time of operation.
It produces the exact same output when provided with the same input. They have no mind of their own. They operate when called upon to do so in the pre-ordained manner. They do not know why they are doing something or what the external events are that cause them to operate in the way that they do.
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They are, in effect mere machines carrying out actions which in another age would have been carried out by a suitably trained human. They are no different to a robot assembling a car rather than a worker on a factory floor or a kitchen blender relieving a cook of the manual act of mixing ingredients. All of these are machines operating as they have been programmed to operate once activated. Where it is relevant to determine what the intention or knowledge was underlying the mode of operation of a particular machine, it is logical to have regard to the knowledge or intention of the operator or controller of the machine.
In the case of the kitchen blender, this will be the person who put the ingredients in and caused it to work. His or her knowledge or intention will be contemporaneous with the operation of the machine. But in the case of robots or trading software in computers this will not be the case. The knowledge or intention cannot be that of the person who turns it on, it must be that of the person who was responsible for causing it to work in the way it did, in other words, the programmer.
Cryptocurrency Regulations in Singapore | ComplyAdvantage
Necessarily this will have been done at a date earlier than the date on which the computer or robot carried out the acts in question. I agree with Quoine that regard should be had to the knowledge and intention of the programmer of the program in issue when that program or the relevant part of it was written. Accordingly, in my judgment, in circumstances where it is necessary to assess the state of mind of a person in a case where acts of deterministic computer programs are in issue, regard should be had to the state of mind of the programmer of the software of that program at the time the relevant part of the program was written.
Although determined in the context of the law relating to mistake, what are the potential implications of such findings in relation to autonomous systems those that act or make decisions independently of humans , and artificial intelligence in particular? There are many areas of law not just the law of mistake where actual or constructive knowledge is relevant, for example, the law of negligence.
It is likely that, without regulation, we may see cases dealing with issues like these in determining matters such as civil liability and criminal responsibility in relation to the operation of artificial intelligence. For more information, see our site: Artificial intelligence. To succeed on its claim for breach of trust, B2C2 had to first establish that a trust over the cryptocurrencies could be, and had been, created. There had been no express agreement between B2C2 and Quoine nor any other user of the Platform that cryptocurrencies would be held on trust, so the court had to consider whether nonetheless a trust had been created by reference to whether the three elements of a trust had been satisfied: certainty of intention, certainty of subject matter and certainty of objects.
The second element, certainty of subject matter, is of most interest here given it required determining whether cryptocurrencies may be treated as property which may be held on trust.
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In this case, Quoine was prepared to assume that cryptocurrencies satisfied that criterion. Thorley IJ confirmed, obiter , that this was indeed the correct approach:. Regrettably, the court did not consider the precise nature of the property right as that point was not in dispute , although it noted that it was the subject of academic debate.
It is disappointing that this opportunity was not taken, as the nature of the property right is important.
For example, it will be critical in ascertaining the location of property its situs and the law governing transfers of property that is, alienation. It is also significant in matters of insolvency, insurance, inheritance and taxation, amongst others. The Singaporean courts are not alone in tending towards treating cryptocurrencies as property. Courts from Ohio to California to South Korea have handed down decisions finding cryptocurrencies to be property. In China, despite a ban on initial coin offerings ICOs , cryptocurrency exchanges and Bitcoin mining, some courts and tribunals have held cryptocurrencies to be property.
Similarly, the English courts have been willing to issue proprietary injunctions over cryptocurrencies see below discussion. What remains wanting, however, is clear guidance on the exact nature of cryptocurrencies — most agree that is it not a chose in possession , but is it a chose in action , or something else entirely?
Also, importantly, is this a question appropriate for courts to determine at all, or is it one that requires legislation? For more information on the legal nature of cryptocurrencies, see our briefing on Deciphering Cryptocurrencies. The characterisation of cryptocurrency as property has other significant implications in law, particularly in relation to the relief available to a party who has suffered loss. Quoine objected that that would have led B2C2 to an even more advantageous position, given further fluctuations in the market.
The court agreed. Considering the volatilities of the market, the court found that the proper relief lay only in damages:.