Check one exchange's licence, legal entity and customer asset terms, then decide whether to use it.
Darren has S$2,000 to invest, an example figure, and has been relying on a friend's recommendation for where to buy crypto. They want to make the decision themselves. They have already read about the Payment Services Act, the retail protections and what a licence cannot do, but they have not yet checked a specific exchange from start to finish.
Reading about checks is easy, and running one on a real exchange is the part that counts. A check takes about 25 minutes. It has four steps, followed by a one-line verdict. You need three things open: the exchange's website or app, the MAS Financial Institutions Directory and the MAS Investor Alert List. Both MAS resources are on the MAS website. Keep notes as you go and put the date on them, because licence status can change.
This course does not name or recommend any exchange, so the worked example below keeps details general. Use an exchange you already use or are considering.
A brand is the name shown on the app, and a company is a different thing. The legal entity is the company you actually sign an agreement with. MAS licenses the legal entity, so that is the name you need.
Open the exchange's terms of service. Some exchanges call it terms of use or user agreement. The entity is usually named near the start, in the first few paragraphs or a definitions section, where the document says who "we" or "the company" is. Copy the name exactly, including "Pte. Ltd." or any other suffix, and note the country where it is registered. Then find the section that says which country's law governs the agreement, which is usually near the end of the terms.
Some terms name more than one entity, for example one company for Singapore customers and another for everyone else. Find the one that applies to a customer in Singapore. If the terms name no legal entity at all, record that in your notes, because it is already a reason for concern.
Search the MAS Financial Institutions Directory by the legal entity's name rather than the brand. Record three things from the listing: the exact listed name, the licence type and the licensed activities. You are looking for a licence that covers digital payment token services. For the larger exchanges, that is a Major Payment Institution (MPI) licence, as covered in Lesson 3.1, How MAS licenses crypto exchanges.
If the brand appears in the directory under a different entity from the one named in the terms, stop and work out why. The mismatch might be an innocent difference in how a name is written. It might also mean the company you would contract with is not the one MAS licensed.
Custody information is in the terms or the exchange's help pages. Lesson 3.2, The protections MAS requires for retail customers, sets out that licensed firms must hold retail customers' tokens on trust and keep them separate from the firm's own assets. Use the documents to answer four questions:
Are retail customers' tokens held on trust and kept separate from the firm's own assets? Does the exchange lend out or stake customers' tokens, and if so, to whom and on what terms? How are Singapore dollar balances held? What happens to customers' assets if the firm becomes insolvent?
For each answer, quote the relevant sentence from the terms in your notes. You can then show someone what the terms actually say, instead of relying on your impression of them.
Some exchanges describe cash balances as safeguarded customer money. Safeguarded customer money is not the same as an SDIC-insured deposit, so write down the difference if you see the phrase.
On the MAS Investor Alert List, search the brand, the website address and any similar-looking names. Lookalike names are common, and firms on the alert list sometimes rebrand. A match does not settle everything on its own, but Lesson 3.3, What a licence does not protect you from, treats it as a strong signal to stop and look harder.
Finish with a one-line verdict that follows from the evidence recorded above it. "Passes" or "fails" alone is not enough, so give the reason in a few words, such as "Fails: entity in terms is not in the directory" or "Passes: licensed MPI, tokens held on trust, no alert list match". If you could not answer one of the steps, the honest verdict is that the exchange has not passed yet.
Darren first ran the check on the licensed app they were considering. The terms named a Singapore private limited company in their first section, and Singapore law governed the agreement. In the directory, the same entity was listed as a Major Payment Institution licensed for digital payment token services, and Darren noted that they checked it on the day the notes were written. The terms said retail customers' tokens were held on trust and segregated, and the exchange offered no lending or staking to retail customers. Cash balances were held in accounts the terms called safeguarded customer money, and Darren noted that this is not an SDIC-insured deposit.
On the alert list there was no match for the brand or the website. Darren did find one lookalike website name whose owner was on the list. That site was not the exchange being checked, but it is the kind of site someone could reach by mistyping the address, so Darren bookmarked the real site to always reach it directly. Their verdict was a pass, with a reminder to repeat the check in a year.
Darren then ran the same check on the overseas app their friend had recommended. The terms named a company registered outside Singapore, and the directory had no listing for it. That is not proof of wrongdoing, but it means every protection from Lesson 3.2 is missing, so Darren's verdict was fail.
Now take the exchange you chose and work through each step in order.
Fill in the exchange check template for one exchange. Then write one line saying whether it passes your check.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).