A few weeks ago, Binance International (Binance.com) made headlines in Singapore after the Monetary Authority of Singapore (MAS) ordered it to stop providing payment services in Singapore.
A week later, DBS Vickers and The Independent Reserve, both full-fledged crypto exchanges, were licensed from MAS.
Which give? Why did DBS get the green light when Binance.com was banned?
Key to this is the MAS’s Payment Services Act, which combats money laundering and financial terrorism, while protecting consumers from technological risks.
DBS Vickers and The Independent Reserve meet MAS requirements and can legally operate here, unlike Binance.com.
What is the difference between Binance.com and Binance Singapore?
Just to clarify, there are two different Binances in Singapore: Binance International (Binance.com) and Binance Singapore.
Binance International (Binance.com) has an extensive list of services, notwithstanding the following:
Payment of trading fees on Binance DEX (decentralized exchange)
Pay the transaction fees on the Binance Chain
Pay the transaction fees on the Binance Smart Chain
Pay for goods and services for online and in-store purchases (for example, using Binance Card or Binance Pay)
Pay for hotel and / or flight reservations and more on Travala.com
Use it as a community utility token on the Binance Smart Chain ecosystem (such as games and DApps)
Participate in token sales hosted on the Binance Launchpad
Donate on Binance Charity
Providing liquidity on Binance Liquid Swap
Additionally, Binance International has one of the largest selections of cryptocurrencies to trade – over 100, in fact. In comparison, Gemini Singapore only has over 50 cryptocurrencies.
Compare these wide ranges of services and selection of cryptocurrencies with Binance Singapore. It only has 8 cryptocurrencies available for trading, and there is no exchange interface (or expert user interface). It stands to reason that consumers in Singapore would naturally look to Binance International to grow their crypto businesses after dipping their toes into Binance Singapore.
Binance International also has a 0.1% lower trading fee, while Binance Singapore has a 0.6% trading fee. Cheaper is better, right?
Not to MAS, at least, as Binance International does not hold a license to operate in Singapore under the Payment Services Act. As a result, Singaporeans with funds in Binance International have until Tuesday, October 26, 2021 to withdraw their funds and store them in an exchange approved by the MAS.
What is the Payment Services Act?
The Payment Services Act was introduced in 2019 to protect consumers from the risks associated with digital payment services that have emerged in recent times.
This law was created following several consultation documents (such as the Consultation Document on the Proposals for Opinions by Payment Services on the Prevention of Money Laundering and the Fight against the Financing of Terrorism) which identified four key risks in the electronic payment ecosystem:
Money laundering and terrorist financing
User protection (protection of electronic funds in transit, as well as electronic funds deposited)
Interoperability (a common payment standard and infrastructure)
Mitigate technological risks through governance, authentication, cyber hygiene, encryption and the fight against fraud
Since then, MAS has made managing these risks a priority; see the articles below:
There is also the MAS Investor Alert List, of which Binance International is a part. It’s on the first page, nothing less.
Which crypto exchanges must comply with the payment services law?
The payment services law applies to major players classified as a major payment institution by the MAS:
Over S $ 3 million in monthly transactions for all types of business
Over S $ 6 million in monthly transactions for two or more types of business
Over S $ 5 million in daily e-money outstanding
According to Coinmarketcap, Binance International’s trading volume is estimated at S $ 45 billion per DAY. Binance.com is definitely ranked among the top payment institutions.
For such a gigantic financial entity, it would make sense for MAS to want to defend Singapore consumers against Binance International, lest it consume them all.
Meanwhile, there are many smaller crypto exchanges that have not been officially sanctioned by the MAS. Note that they may not have an official license and can work with temporary licenses.
What must be done to comply with the law on payment services?
To comply with the payment services law, major payment institutions like Binance International must protect customers’ money by one of these means:
Commitment by a bank or prescribed financial institution to be fully responsible to the customer
Guarantee by a prescribed bank or financial institution
Segregation in a trust account maintained by an approved Singaporean bank or prescribed financial institution
In addition, anti-money laundering and / or financial terrorism measures are imposed on these 5 payment services:
National money transfers
Cross-border money transfers
Digital payment, transaction or token exchange
Does this list sound familiar to you? If so, it is because all of this applies to the services offered by Binance International.
While we don’t know the exact details that led to Binance International being banned in Singapore, it stands to reason that it does not meet any or all of the requirements set out in the Services Act. of MAS payment.
Unlike Binance International, DBS Vickers and Independent Reserve have obtained licenses to operate their crypto exchanges in Singapore.
From this we can deduce that they comply with the Payment Services Act.
DBS Vickers, at least, has met this requirement:
Points to remember for cryptocurrency investors
For crypto investors, it’s a good thing that MAS is setting clear guidelines on what is needed to operate in its green gardens.
Binance International does not meet MAS’s anti-money laundering and financial terrorism requirements, which is why it got the boot.
Meanwhile, DBS Vickers and Independent Reserve have been given the green light to operate in Singapore.
They join a growing list of crypto exchanges that can work in Singapore, but note that those that do already do not have an official license like DBS Vickers and Independent Reserve do. They operate on temporary licenses. It is expected that their licenses will be revoked or formalized depending on how the MAS selects them.
We are in this turbulent time where MAS is laying the foundation for crypto exchanges to operate legally in Singapore. Before you panic and transfer your funds to DBS Vickers or Independent Reserve, it would be good to know:
If your current exchange of choice plans to comply with MAS regulations
What are the trading fees on DBS Vickers and Independent Reserve
What are the withdrawal funds from your current exchange, if you decide to move your funds
It’s a scary, but also incredibly exciting time to be in the cryptocurrency landscape in Singapore. Just make sure to act with good research and information when it’s time to move your funds!
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Original article: MAS Payment Services Act: Why is DBS Vickers allowed to trade crypto while Binance is banned ?.
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