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Clifford Chance

Clifford Chance


Talking Tech

Singapore Court sheds light on scope of the payment services licensing regime for cryptocurrencies

Crypto Fintech Banking & Finance 30 May 2023

In Rio Cristofle v Tan Chun Chuen Malcolm [2023] SGHC 66, the Singapore High Court recently considered claims arising out of a cryptocurrency trade that went awry.  The court confirmed that the Payment Services Act 2019 (PSA) does not impliedly prohibit contracts relating to the sale and purchase of cryptocurrency and analysed what would amount to carrying on a business of providing unlicensed digital payment services which would result in criminal liability.

The following case report examines the Singapore High Court's ruling in relation to the legislation regulating the provision of payment services in Singapore, including digital token services.

Regulating fintech in Singapore: background to the Payment Services Act 2019

The PSA was enacted in 2020 to streamline the licensing and regulation of payment service providers and to provide for the oversight of payment systems in Singapore.  It was intended to provide "regulatory certainty and consumer safeguards, while encouraging innovation and growth of payment services and fintech."  Among other things, the PSA established a regulatory framework for cryptocurrency dealing or exchange services.

The facts

The case concerned a back-to-back cryptocurrency trade concluded between the plaintiff, the defendant, and a third-party buyer.  The plaintiff was the sole director and shareholder of GCXpress Commerce Pte Ltd (GCX), an OTC desk for cryptocurrency trades; while the defendant was the managing director of Qrypt, a company also engaged in cryptocurrency trades.

On 1 December 2020, Kenneth (TK) approached the defendant looking to purchase Bitcoin worth around S$320,000.  The defendant looked to the plaintiff for the Bitcoins, even though GCX had already ceased business at the material time.

Arrangements were then made for the transfer of the Bitcoins from the plaintiff to the defendant, and then from the defendant to TK.  After the transfer was made, however, TK suddenly deleted his entire Telegram message history with the defendant.  A quarrel then broke out as to who was entitled to the S$320,000 in cash, and the plaintiff subsequently sued the defendant for a breach of the agreement.

While the defendant alleged that he was the victim of a scam, the court's analysis focussed on the plaintiff's claim for breach of contract, and whether the agreement between the plaintiff and the defendant (evidenced via Whatsapp messages) was enforceable.

Was the agreement illegal under the PSA, and thus unenforceable?

The arguments before the court largely concerned section 5 of the PSA, dealing with the licensing of payment service providers, which provides:

"Licensing of payment service providers

5.—(1) A person must not carry on a business of providing any type of payment service in Singapore, unless the person —

(a)          has in force a licence that entitles the person to carry on a business of providing that type of payment service; or

(b)          is an exempt payment service provider in respect of that type of payment service.


The defendant argued that the agreement was illegal, and thus unenforceable, because neither the plaintiff nor GCX had a licence or an exemption to operate as a Payment Service Provider under the PSA at the material time.  The plaintiff's position was that the transaction in question was a peer-to-peer transaction, for which a licence or exemption under the PSA was not required.

The court found that the contract was not ex facie illegal because the purpose of Section 5 of the PSA, is not to prohibit contracts relating to the sale and purchase of cryptocurrency, but to penalise those caught providing such services without the requisite licence or exemption.  Accordingly, a contract with an unlicensed party would not be void for illegality, by reason of the party's lack of licence alone.

Why was the contract not void for illegality in this case?

The court also considered whether the agreement in question had an illegal object, namely to contravene section 5 of the PSA.

To this end, the court considered that the requirement of "[carrying] on a business" was a key element in establishing liability under section 5 of the PSA.  Whether a person is carrying on a business of providing a type of payment service in Singapore may be assessed by reference to three indicia: (i) whether a profit was made from the arrangement; (ii) the number of transactions made by the party; and (iii) the role the party played in the transaction (for instance, whether acting in one's own capacity or as an intermediary).  (These principles were extracted from the case of Public Prosecutor v Lange Vivian [2021] SGMC 11 in which the accused had pleaded guilty to carrying on the business of providing a payment service in Singapore without the necessary licence.)

In this case, the court found that there was no illegal object, because the plaintiff was merely selling Bitcoin already in his possession to the defendant.  The court noted in particular that the arrangement involved two separate back-to-back contracts from the plaintiff to the defendant, and the defendant to KT – the plaintiff was not acting as an intermediary between the defendant and KT.  Accordingly, the third indicia, distinguishing bona fide trading in cryptocurrencies from providing and unlicensed digital payment token service, was absent from the present transaction.  The court held that the plaintiff was not providing any type of payment service or carrying on a business of providing such a payment service, such as to contravene s 5 of the PSA.

On this basis, the court concluded that the agreement between the plaintiff and defendant was enforceable, and the defendant was in principle liable for breach of the contract and payment for the balance of Bitcoins, subject to the finding that both parties were the proper parties to the agreement.

Ultimately, however, the court found that the plaintiff and defendant were not the proper parties to the contract, and on that basis dismissed the plaintiff's claim with costs.


This case clarifies that a contract with an unlicensed party will not be void for illegality by reason of its lack of licence alone.  The key question ultimately rests on the capacity in which the party was transacting, and whether it was carrying on a business of providing a payment service in Singapore. 

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