Facebook’s Libra may be regulated under the payments act in Singapore, says minister

By Staff Writer

While the details of Facebook’s new digital currency Libra is not fully clear, it might be regulated under the payments services (PS) act in Singapore, according to Tharman Shanmugaratnam, senior minister and minister in charge of the Monetary Authority of Singapore, the city state’s de facto central bank.

The Singaporean regulators, however, will continue to engage with Facebook on its proposed cryptocurrency Libra as the project is still in its nascent stage, he said in response to questions from lawmakers (see here) on how the regulators would deal with Libra.

“Depending on its nature, Libra may be regulated under the PS Act, and be subject to requirements on anti-money laundering and countering the financing of terrorism imposed under the MAS Act,” he said.

Libra’s activities with regards to data will subject to Singapore’s data privacy law, Personal Data Protection Act, he said.

At this stage, however, it is too early to say how the MAS would treat Libra, he told the parliament in questions whether Singaporean regulators would make changes to regulations in view of Libra’s potential threat to market competitiveness and data privacy.

“At this point, however, we do not have details as to how the Libra Association plans to implement its solution as it’s in the early stages of development, with a number of issues to be worked around its features, use cases and governance arrangements,” he told the lawmakers.  “Like other regulators around the world, MAS will make an informed assessment of the potential benefits and risks of Libra once these details become clear.”

He said the city-state already has a well-developed payments ecosystem, including wallets and apps, and said it is open to other innovations if they could bring benefits without undermining financial stability.

Shanmugaratnam said Libra may be regulated under the Payment Services Act, which covers cryptocurrencies, called “digital payment tokens” under the law, e-money and domestic and cross-border remittances.

“MAS will continue to engage Facebook on its plans for Libra, and consider appropriate regulatory responses once they are clear,” he said.

Singapore has one of the most developed fintech eco-systems in the world and was the first regulator to issue a fintech regulatory sandbox in Asia. The city hosts the world’s largest fintech gathering every November, known as the Singapore FinTech festival, partly supported by the MAS.

Singaporean tax agency, Inland Revenue Authority of Singapore, has decided to end goods and services tax on cryptocurrencies beginning Jan 2020 (see here) to “better reflect the characteristics of digital tokens.”

Compared to other regulators, Singapore’s position with regards to Libra is relatively moderate. Libra has faced much backlash from the global watchdogs, most notably in the countries such as the United States where the lawmakers have urged for a moratorium on Libra (see here).

The Indian government is also publicly expressed that it is not comfortable with private currencies such as Libra (see here), a position that is not surprising given the country’s plan to ban cryptocurrencies and impose a 10-year prison sentence.

It remains to be seen how the ban on Libra in India would affect Facebook’s plan to bring financial inclusion to the world’s nearly 1.7bn billion unbanked population.

 

 

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