Payment token derivatives: Singapore’s regulatory regime goes live

Singapore is one of the leading jurisdictions globally to provide clarity around the regulation of payment token derivatives. Effective 18 May 2020, this new regulatory regime is now in force.

As background, the Monetary Authority of Singapore (“MAS”) consulted in November last year on the regulation of payment token derivatives in Singapore. The consultation was focused on the regulation of derivatives contracts that reference payment tokens as underlying assets (“Payment Token Derivatives”) under the Securities and Futures Act (“SFA”). The MAS has noted increasing industry interest in the payment tokens market and proposed the regulation of Payment Token Derivatives out of a two-fold desire to encourage innovation while ensuring financial stability and protection of investors. The consultation closed in December, and the MAS released their response to industry feedback on 15 May 2020.

In this client alert, we set out key highlights on the regulatory regime as clarified in the MAS’ response, along with a brief update on the regulatory approach taken in Hong Kong and the United Kingdom.

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