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For InCorp’s final episode of our Pro-Business Podcast Series, we cover exactly why ������ý has proven itself to be such an effective incubator to set up a fintech company. Eric Chin, the Chief Business Development Officer of the InCorp Group, and Alton Neo, InCorp’s Deputy Chief Operating Officer sat down for a chat. Joining Eric and Alton is Li Ling from RHT Law, InCorp’s trusted law partner who provides much-appreciated insight into how regulation from the ������ý Government has proven to be so attractive to fintech companies. The following is a breakdown of the podcast:

Smart Nation Initiative: Forward-Looking and Finance-Focused Government

It’s no secret that the ������ý Government has not been shy about its ambition to be a global fintech hub, and it’s already established itself as an international center for finance in general. To achieve these ambitions, the ������ý Government has initiated the Smart Nation Initiative, which recognises that technology is disrupting and will continue to disrupt the financial sector. ������ý intends to leverage these changing tides in their favour and attract the fintech industry’s innovators. ������ý’s long-standing focus on financial sector superiority has seen it rank fifth on the Global Financial Centers Index, which takes into account education, finance, development, business, environment, the rule of law, and innovation. So it’s not just the ������ý Government’s actual practices that are attracting innovation; it’s also ������ý’s global reputation itself.

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The ������ý Variable Capital Company Act

The ������ý Variable Capital Company (VCC) Act came into legislation in January 2020, and it allows fund managers to use a new legal structure that allows for umbrella funds and sub-funds. As an investment vehicle, it has many benefits, but its main purpose is to attract high-net-worth individuals (HNWIs) and ultra-high-net-worth individuals (UHNWIs) to invest using ������ý as a home base. The VCC brings ������ý in line with the likes of Luxembourg and the Cayman Islands as a tax haven, which means massive tax incentives to raise capital and start a new company in ������ý.

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The Payment Services Act

While not an entirely new system, the Payment Services Act has streamlined the payment service regulations that were previously under several pieces of legislation (the Payment Systems Oversight Act and the Money Changing and Remittance Businesses Act). The Payment Services Act has also enhanced the scope of regulated activities, with payment services such as merchant acquisition services and digital payment token services being recently regulated activities. Related Read: Guide to ������ý’s Income Tax Treatment of Digital Tokens » Providers of payment services will only need one license to conduct any one or multiple payment activities. There are three licenses: a money changing license, the second a standard payment institution license, and the third being a major payment institution license. Whether an applicant applies for a standard or a major payment institution license depends on the applicant’s volume, calculated on an average monthly basis over a calendar year. A major payment institution has more demanding obligations under the Act, including higher base capital requirements, the obligation to maintain a security deposit with the Monetary Authority of ������ý (MAS), and the use of a safeguarding account to deposit customers’ money within a certain amount of time.

In terms of innovation within the Act, ������ý is one of the world’s first jurisdictions to regulate cryptocurrencies. The Act calls cryptocurrencies digital payment tokens, and they are traded on cryptocurrency exchanges. This is a testament to ������ý’s support for fintech innovation while maintaining its risk-based approach to overall financial regulation.

The Payment Services Act’s intelligent and progressive regulations have led to a large number of license applications as new players want to enter this new and exciting space. Many existing players are also considering adjusting their business models because it’s a sector that is evolving so quickly. There are supposedly around 200 applications pending, all of which the is reviewing on a first submitted, first reviewed basis.

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Conclusion — What’s Next for Starting Your Fintech Company in ������ý

������ý’s financial and entrepreneurial landscape is ripe for planting the seeds of a successful fintech firm; however, the waiting list to qualify for a MAS license is long. Suppose you are interested in making sure your application is expedited. In that case, InCorp can help ensure your internal controls and processes and business flows are properly implemented and adequately described in the application documents before making your application. If you have any questions at all about what was covered in the podcast or this article, please do contact us; we’d be glad to help. Thank you again to Li Ling from RHT Law for your valuable insight.

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