The Monetary Authority of Singapore (MAS) has recently heightened the risk level of Digital Payment Token (DPT) service providers as part of its latest Counter-Terrorism regulation update. This move, which took effect on July 1, saw the MAS elevate the risk level of DPTs from medium-low to medium-high. The decision was made following a comprehensive review of Singapore’s Terrorism Financing National Risk Assessment (NRA) and National Strategy for Countering the Financing of Terrorism. The MAS specifically pointed out “cross-border online payments” and “cross-border fast payment systems” as potential new channels for terrorist funding activities. The need for vigilance was emphasized by the regulator in light of the evolving nature of terrorism financing and the risk of terrorist actors exploiting Singapore’s economic openness.
DBS Group’s Role in Custodying Stablecoin Assets
In a related development, Singapore’s largest bank, DBS Group, has partnered with Paxos Digital Singapore Pte. Ltd, a MAS-licensed subsidiary of Paxos, to custody stablecoin assets. This decision underscores DBS Group’s pro-crypto stance, as the bank has silently become one of the largest holders of Ethereum. Paxos selected DBS as its primary banking partner for cash management and stablecoin custody, citing the bank’s ability to help stablecoin issuers meet the stringent standards expected by regulators and customers. Evy Theunis, the head of digital assets at DBS, expressed confidence in the bank’s solutions, stating that they will enable stablecoin issuers to meet the high standards demanded of them.
Singapore’s Blockchain Push and Pro-Crypto Stance
Over the past year, Singapore has been actively exploring ways to leverage blockchain technology to bolster its position as a global financial hub. The country has gained recognition for its pro-crypto stance and high adoption rate of digital assets. By embracing advancements in financial technology, Singapore aims to strengthen its reputation as a forward-thinking and innovative financial center, while also ensuring robust measures are in place to combat terrorism financing activities.
Singapore’s regulatory authorities and financial institutions are taking proactive steps to address the evolving threats posed by terrorism financing. By raising the risk level of DPT service providers and embracing digital asset custody solutions, Singapore is sending a clear message that it is committed to safeguarding its financial system from illicit activities. As the global landscape of terrorism financing continues to evolve, Singapore’s proactive approach will be crucial in mitigating risks and maintaining its status as a trusted international financial hub.
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