How to Legally and Compliantly Operate a "Stablecoin Payment Company" in Singapore: A Practical Checklist for Founders

Written by: Lawyer Yang Qi

Stablecoins are increasingly being used by more enterprises for settlement, cross-border payments, fund management, and B2B payments. However, in Singapore, “using stablecoins for payments” is often not just a product issue but a typical comprehensive project involving regulatory boundaries + AML/CFT anti-money laundering + technological risk management.

This article explains the core pathway in an “entrepreneurial executable” manner: first clarify your business model, then build the licensing and compliance system, which can significantly reduce the risk of regulatory violations and subsequent rectification costs.

Note: This article provides general information sharing and does not constitute legal advice. The final compliance conclusion depends on your transaction process, customer types, and the flow and control of funds/tokens.

1. The most important first step: “Draw your business”

Before discussing specific implementation steps, business leaders should first draft a one-page flowchart of fund/token circulation, at least answering these questions:

Who are your customers: individuals / merchants / specific industry businesses?

Do you hold or control your customers’ stablecoins (custody, private key control, multi-signature permissions)?

Do you perform fiat ↔ stablecoin or stablecoin ↔ stablecoin exchanges?

Do you facilitate transfers (A to B, merchant collections, corporate payments)?

Are your customers in Singapore or overseas? Do you “provide services in Singapore to overseas customers”?

Are you a stablecoin issuer or only using third-party stablecoins (like USDC/USDT)?

This flowchart determines which regulatory activities you will trigger and what compliance system you need.

2. Licensing judgment: Most stablecoin payments fall under the PSA framework (possibly also involving FSMA)

In Singapore, stablecoin payment businesses usually fall under the scope of the Payment Services Act (PSA), especially activities related to Digital Payment Token (DPT) services (such as transfer, exchange, custody). Additionally, if you provide digital token services from Singapore to overseas customers, FSMA requirements may also be triggered.

Common business models and “possible regulatory triggers”

Merchant collection + stablecoin settlement/clearing: often triggers DPT-related services; if involving acquiring, transfers, cross-border remittances, other PSA payment services may also be involved.

Wallet/custody (your ability to move customer coins): usually considered a high-risk trigger (especially if you control private keys or transfer permissions).

OTC/exchange/matching: generally triggers DPT-related services.

Issuing your own stablecoin: how it triggers inclusion in the “issuer regulatory framework,” with significantly higher compliance requirements.

Practical advice: do not start from “which license do I want to apply for,” but from “what regulated activities have I performed.” Regulatory judgment always depends on the substance of the transaction.

3. If you want to issue stablecoins: first decide whether to follow the “MAS regulated stablecoin” path

If you not only use existing stablecoins but plan to issue your own, the compliance route will be entirely different. You usually need to meet stricter requirements (such as reserve assets, redemption mechanisms, disclosure, audit, and operational risk controls).

The conclusion is simple:

Not issuing: focus on the compliance system for “DPT/payment service providers” (especially AML and technological risks).

Want to issue: you need to establish an institutional-level system for “reserves, redemption, audit, disclosure, governance” according to the issuer framework.

4. Compliance Pillar 1: AML/CFT (must operate like a financial institution)

In stablecoin/digital token-related businesses, AML/CFT is the first aspect regulators look at.

You must have the following “implementable” systems:

1. Company-level risk assessment (EWRA)

Product risk, customer risk, regional risk, channel risk

Which customers require enhanced due diligence (EDD)? Which must be rejected?

2. Customer due diligence (KYC/CDD/EDD)

Identity verification, beneficial owner identification (e.g., corporate clients)

Sanctions and PEP screening (politically exposed persons)

High-risk trigger rules (e.g., anonymity, complex structures, sensitive regions)

3. Transaction monitoring and suspicious transaction reporting (STR process)

Monitoring rules/scenarios (e.g., frequent splitting, rapid in/out, abnormal address links)

Case management and escalation mechanisms: who investigates, who approves, how to maintain an audit trail

Employee training and annual reviews / independent audits

4. On-chain analysis / wallet risk scoring (strongly recommended to implement early)

Whether “legally mandatory” depends on your business model, but from an operational perspective, on-chain fund tracking and address risk assessment are increasingly industry standards, especially when serving high-risk industries, cross-border activities, or providing custody/transfer functions.

5. Compliance Pillar 2: Marketing compliance — don’t turn yourself into “mass-market crypto advertising”

In Singapore, there are clear regulatory concerns regarding the promotion of digital token-related services. Many teams fail not at the product level but at the “promotion method”: large-scale public marketing, exaggerated returns, downplaying risks, guiding public participation—all are very sensitive.

A safer approach is:

Prioritize B2B (merchants, enterprises, institutions)

More “professional” channels: industry conferences, closed-door meetings, partner referrals, targeted content marketing

Clear risk disclosures: avoid “glossing over,” “guaranteed profits,” or “capital preservation”

In short: you can grow, but not with “speculative narratives” to attract users.

6. Compliance Pillar 3: Technological risk, custody security, and outsourcing management (TRM + Outsourcing)

Stablecoin payment companies are a “financial + software” combination. Regulators will assess whether you have institutional-level technological risk governance, especially:

1. Wallet and key management (Custody / Key Management)

Permission separation, approval mechanisms, multi-signature / layered authorization

Full-chain logging and auditability

Two-person review / multi-party approval for key operations

2. Cybersecurity and incident response

Vulnerability management, penetration testing, patching and configuration management

Incident response plans and drills (tabletop exercises)

Backups, recovery, business continuity planning (BCP)

3. Vendor / outsourcing management (especially important) You are likely to outsource to cloud services, KYC vendors, on-chain analysis tools, wallet infrastructure, etc. Regulators will review:

Vendor due diligence and risk assessment

Contract terms (audit rights, data protection, sub-contracting restrictions, exit mechanisms)

Contingency plans and backup options for key vendors

7. Compliance Pillar 4: Personal Data Protection (PDPA)

As long as you perform KYC, collect customer information, transaction data, or device info, you will be subject to Singapore PDPA obligations. It is recommended to start with two “low-cost, high-yield” actions:

Designate a DPO (Data Protection Officer) and establish external contact channels

Create a data map: what data is collected, its purpose, storage location, sharing partners, retention period

8. Founder’s Action Plan: Day 0 → Day 90

Day 0–15: Clearly define boundaries

Map out fund/token flowchart (Flow)

Clarify whether you custody, exchange, transfer, whether customers are in SG or overseas

Preliminarily determine “which regulated activities are triggered”

Day 15–45: Build the compliance framework

AML/CFT: risk assessment, CDD/EDD, monitoring and STR processes

Technological risks: wallet / key management, security baseline, incident response

Outsourcing management: vendor due diligence + contract clauses + exit plans

PDPA: DPO, privacy policy, data retention and access controls

Day 45–90: Make compliance operational

Deploy screening and monitoring tools, establish case management and record-keeping

Complete staff training, compliance reporting mechanisms, internal review systems

Organize licensing / compliance preparation packages (governance structure, policies, architecture, processes, evidence chain)

Conclusion: Compliance is not “cost,” but a threshold for your sustainable growth

Stablecoin payments can be rapid, but compliance must be faster. Solidify regulatory boundaries, AML, and technological risk management, and your business will find it easier to secure institutional partnerships, pass due diligence, and withstand inspections at critical moments.