Considering a fintech startup in Singapore? Congratulations! You are entering a very promising financial innovation market. Singapore has a strong framework for regulation and business-friendly policies. That is why it appeals to emerging startups.

But you must familiarize yourself with the licensing environment and regulatory requirements. Here is a guide for you:

Company formation                                         

The first effective action you would take is to establish a local legal entity by registering with the Accounting and Corporate Regulatory Authority. The easiest startup structure is the Private Limited Company (Pte. Ltd.). It allows companies to enjoy the following:

• Limited liability
• Ease of raising funds
• Wide acceptability by partners and regulators.

At this point, you will be required to employ at least one local resident director and meet the incorporation requirements of ACRA. A local corporate service provider can guide you on the legal procedures for company incorporation in Asia.

Decide on regulatory scope

Singapore does not have one fintech license. Rather, it has an activity-based regulatory regime. This means that the licenses you have to get will be based on the kind of services your business provides.

MAS controls financial services through a variety of laws:

• The Payment Services Act
• The Securities and Futures Act
• The Financial Advisers Act.

Here are some common instances:

Payment Services License (PSA)

You need this license if your startup will process payment services, such as:

• Cross-border payment
• E-money issuance
• Merchant acquisition
• Digital payment token services, such as crypto trading.

PSA licences are provided at different levels. Smaller operators receive a Standard Payment Institution (SPI) while larger ones receive a Major Payment Institution (MPI).

Capital Markets Services License

This license is for businesses that operate in regulated capital markets (securities trading or fund management).

Financial Adviser License

This is required if you give investment advice or sell investment products.

There is a special rule if your venture involves the issuance of digital tokens or crypto assets. The recent regulatory changes under the Financial Services and Markets Act (FSMA) imply that the provision of services related to digital tokens will soon be subject to licensing. MAS intends to set the acceptance threshold quite high.

Compliance and controls

After being incorporated and licensed, you will have to comply with continuous obligations:

• Anti-Money Laundering policies
• Data protection policies
• Cybersecurity policies
• Periodic reporting to MAS.

These are the expectations, whether your startup is big or small.

Take advantage of the Regulatory Sandbox

The MAS FinTech Regulatory Sandbox is considered one of the most useful tools for fintech startups in Singapore. This program enables you to experiment with the latest technologies or business models and have a custom regulatory regime.

Provided that your solution is really innovative or does not fit perfectly well within the existing categories, then the sandbox could assist you in testing your model to enable you to pursue complete licensing.

Final words

Starting a fintech company in Singapore means entering an established financial ecosystem that is located near flourishing markets in the region. But you must align your business model with the right licenses. Also, expect high compliance standards and leverage sandbox programs where possible.