Is Your Token a Payment Service? When Digital Assets Trigger Licensing Obligations

Do you have a new crypto AI idea you’d like to bring to life and revolutionise how people transact in the wider blockchain ecosystem? Depending on the scope of your proposed activities, your digital payment token (DPT) idea may just fall under the jurisdiction of the Monetary Authority of Singapore (MAS)’s Payment Services Act (PSA).

Whether you’re in the business of creating or harnessing existing tokens—this can be for utility, governance, or simply representing value—it is all too easy to be caught up in the allure of decentralised technology and the novel functionalities of tokens, potentially resulting in unintended breaches of the PSA.

It is, therefore, essential for you to understand precisely when your token-related activities trigger the PSA’s licensing obligations to build sustainable business operations in Singapore.

Say hello to the Payment Services Act (PSA)

…and be prepared to abide by it, as it will guide your hand in operating your DPT business in Singapore. Implemented in 2019, the PSA uses an activity-based approach to determine the license type your business requires. This is uniformly applied, regardless of the underlying technology.

In all, the PSA regulates seven payment services, several of which are commonly deployed by businesses that deal with digital assets. Below is a summary of the seven categories highlighted by the PSA:

1. Account issuance: Maintenance of accounts where funds—which can be digital assets—are stored and used for payment transactions.

2. Domestic money transfer: Facilitators of fund transfers within different parties within Singapore.

3. Cross-border money transfer: Facilitators of fund transfers between Singapore and overseas.

4. Merchant acquisition: Provision of payment acceptance capabilities to merchants.

5. E-money issuance: Issuers of electronically stored money (e-money) for payments or fund transfers.

6. Digital payment tokens (DPT): Facilitators of the exchange, transmission, or custody of DPTs. MAS defines DPTS as digital representations of value that are used as a medium of exchange. Bitcoin (BTC) and Ether (ETH) are common examples, but other tokens may fall under this category depending on their characteristics and acceptance.

7. Money-changing: Traditional facilitators of foreign currency exchange.

   
   
   
   

For an in-depth study of the PSA, read our article here: Navigating Singapore’s Payment Services Landscape: A Guide to the Payment Services Act

Given that MAS scrutinises the essence of the activity in question, most DPT services will thus be legislated under the first and sixth categories. Labelling your token a “utility token” does not automatically exempt you, especially if it is used as a mode of currency for a regulated payment service.

Entering the PSA’s regulated waters

That said, merely issuing a token, particularly one without monetary utility within a contained ecosystem, might not necessitate PSA licensing. Licensing is dependent on three key factors: the token’s design, the platform’s functionalities, and the value flow. Consider the following scenarios where you may find yourself in need of a PSA license.

Learn the different types of PSA licenses available and the thresholds for each one here: Who’s Licensed, and How: A Breakdown of Payment Services Licences in Singapore

Facilitating value transfers

The first of these scenarios is if you operate a platform that serves as an intermediary for users to send your tokens and/or DPTs to each other as a payment or value transfer. This earmarks your platform as a DPT service that facilitates the transfer of DPTs within or outside Singapore.

If your platform further takes custody of the tokens, managing and executing transfers on your users’ behalf, the regulatory risk increases dramatically—this effectively makes it 100% mandatory for you to be licensed under the PSA’s regulations.

Issuing stablecoins

MAS views stablecoins, or tokens designed to maintain a stable value pegged to fiat currency (like SGD or USD), in a favourable light. Should such a token enable users to store this value and use it for payments, it would strongly resemble e-money. The issuance of such stablecoins is highly likely to be considered e-money issuance under the PSA, thus requiring a license and adherence to all relevant legal requirements.

In addition to the PSA’s rules, MAS also put together a stablecoin regulatory framework, which applies to single-currency stablecoins (SCS) pegged to the Singapore Dollar or any G10 currency issued in Singapore. SCS issuers will need to meet the following requirements:

• Value stability: To ensure a high degree of value stability, SCSes are subject to strict composition, valuation, custody, and audit standards.

• Capital: SCS issuers are required to maintain a minimum base capital of SGD 1 million and liquid assets that minimally meet operating expenses. This is to reduce the risk of insolvency and protect customer funds.

• Redemption at par: When a holder starts a redemption request, issuers are obligated to return the par value of SCS within five business days.

• Disclosure: Issuers are required to provide appropriate disclosures to users, such as their rights as SCS holders, the SCS’s value stabilising mechanism,  and the audit results of reserve assets.

By meeting all the above criteria, stablecoin issuers can then apply for their tokens to be labelled as MAS-regulated stablecoins. This label signals to users that they are relatively safer and more regulated than other DPTs, as they are safeguarded by MAS’s framework.

Offering fiat on and off-ramps services

This goes without saying, but if you directly facilitate crypto conversions, you are operating a DPT service that potentially involves money transfer services.

There are two broad types of crypto conversion services available:

• On-Ramps: Enable users to buy cryptocurrencies using fiat currency (eg: bank transfer and credit card). Examples include:

  ○      Bitzaro

  ○      Stripe Crypto Onramp

  ○      MoonPay

  
  

• Off-Ramps: Enable users to sell cryptocurrencies for fiat currency. They can then transfer the fiat currency back to their bank accounts or wallets. Examples include:

  ○      Coinbase

  ○      Kraken

  ○      Trust Wallet

Learn more about operating on-ramp/off-ramp crypto gateways in Singapore here: On-Ramp, Off-Ramp: How MAS Views Crypto Gateways in 2025

Custody services

If your platform holds DPTs on behalf of your customers, especially if it also doubles as a facilitator of payment transactions, it is categorised as a DPT custodial service provider. This is naturally regulated as a DPT service under the PSA, necessitating the acquisition of an appropriate license.

Build a compliant future for your tokens with Eastern Mezzanine

Digital asset innovation may be supported in Singapore, but it is underpinned by a stringent regulatory framework that you need to comply with. And this is precisely what our legal team at Eastern Mezzanine specialises in.

Whether you intend for your token to facilitate transfers, represent stable value, enable payments within your ecosystem, or be exchanged for fiat, we’ve got you covered with our deep expertise in MAS's approach to digital assets via the PSA.

Book a consultation with us today to find out if your proposed token requires licensing with MAS.