Singapore to Issue Guidance for Banks to Vet Crypto Clients
• Singapore authorities are working with banks to create new guidance on vetting crypto clients.
• The guidance will cover stablecoins, nonfungible tokens (NFTs) and firms providing services in payments, trading and transfers of these assets.
• Banks would decide whether they want to take on crypto clients based on their risk appetite.
Singapore Working on Cryptocurrency Guidelines
Singapore authorities are currently working with banks and other lenders to set uniform standards for vetting cryptocurrency clients, sources close to the matter told Bloomberg. According to the report, the central bank and police have been helping banks to work on their vetting process when opening accounts for service providers in the cryptocurrency and digital asset space.
Guidance Includes Stablecoins & NFTs
The initiative is set to cover stablecoin and NFTs as well as transferable gaming or streaming credits. The initiative is set to focus on firms that provide services in payments, trading and transfers of these assets. Banks would have the final say in deciding whether to accept cryptocurrency clients based on their risk appetite, the sources added.
Tighter Regulation After Recent Turmoil
The guideline to be issued by Singaporean authorities could be considered a way of tightening regulation in the crypto space following the recent high-class collapses. Last year, numerous crypto companies, including FTX and Terraform Labs, collapsed resulting in the loss of billions of dollars. The recent collapse of Silvergate Bank, Signature Bank, and Silicon Valley Bank (SVB) has also put some crypto clients scrambling for new banks.
Government Not Stopping Crypto Businesses
At the moment, the Singaporean government doesn’t stop banks operating in the country from doing business with crypto companies. While talking about this issue during an online conference last April 2021 held by FinTech Association Of Hong Kong (FTAHK), Ravi Menon – managing director of Monetary Authority Of Singapore (MAS) said: “We do not prohibit or discourage regulated institutions from taking exposure” when it comes to digital assets like cryptocurrencies” .
Conclusion
The new guidelines being worked on by Singaporean authorities are meant to help banks better vet their crypto customers so as not to be caught off guard during times of turmoil like what happened last year with several major cryptocurrency companies collapsing leading to massive losses for investors . With this move , MAS is looking at safeguarding both investors as well as financial institutions from such occurrences .
