Banks in Singapore are working with city-state authorities to establish uniform standards for screening prospective cryptocurrency and digital asset customers among various global industry influences.
Singapore Plans New Guidance for Banks to Vet Crypto Clients
Lenders are working with central banks and police to improve vetting approaches when opening service provider accounts with digital assets of all kinds, according to people familiar with the matter. The industry-led project has been running for about six months, and a report outlining best practices in areas like due diligence and risk management may be published in the next two months, the people said. Stablecoins, non-fungible tokens, transferable gaming or streaming credits are also covered by this initiative, which focuses on companies providing services related to payment, trading and transfer of these assets, said one of the people involved.
Even with such guidelines, banks will decide whether to accept these customers based on their risk appetite. The Monetary Authority of Singapore and the police are part of a bank-led task force for the project, they said. The cryptocurrency industry has long struggled with direct access to traditional banks.
Many of the banks remain suspicious amid the volatility and potential regulatory overheating of digital assets, especially following high-profile defaults on companies from FTX to Terraform Labs. Bankruptcy of US lenders Silvergate Capital Corporation and Signature Bank, which provided payment services to cryptocurrency companies, also had customers looking for a new bank. In response to an inquiry from Bloomberg, MAS said there are no rules preventing banks operating in the country from doing business with companies that deal in cryptocurrencies and other forms of digital assets.
“As with any other current or prospective customer, banks are required to conduct customer due diligence measures to understand and manage the risk(s) posed by them. Banks make their own determination of whether to start or continue a banking relationship with a customer, balancing between commercial considerations and business risk tolerance.” – the MAS said
Nonetheless, some businesses in the country had previously struggled to open bank accounts as domestic lenders were concerned about illegal cash flows and the possibility of other criminal activity.
Singapore has seen its fair share of crypto scandals by companies based in the country, including Terraform Labs and crypto hedge fund Three Arrows Capital. It is one of the major jurisdictions to introduce industry licensing regimes and propose further restrictions on cryptocurrency trading by retail investors.
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