Singapore Plans New Guidelines for Banks on Crypto Customer Verification

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(Bloomberg) — Authorities in Singapore are working with lenders in the city-state to establish uniform standards on screening potential clients from the crypto and digital asset sectors, amid various global fallout in the industry.

The central bank and the police have helped banks refine their verification approach when opening accounts for service providers in all types of digital assets, according to people with knowledge of the matter. The project has been underway for about six months, and an industry report outlining best practices in areas such as due diligence and risk management could be released within the next two months, the people said, asking not be identified as the discussions are not public.

Stablecoins, non-fungible tokens as well as transferable game or streaming credits will also be covered by this initiative which focuses on companies providing payment, trading and transfer services for these assets, said one of the participants. people. Even with such guidelines, banks will decide whether or not to accept such customers based on their risk appetite, the people said.

The crypto industry has long struggled for easy access to traditional banks, many of which remain wary of the volatility of digital assets and potential regulatory heat, especially following high-profile failures in businesses ranging from FTX at Terraform Labs. The collapses of US lenders Silvergate Capital Corp. and Signature Bank, which provided payment services to crypto firms, also caused customers to rush for new banks.

There are no rules preventing banks operating in the country from doing business with companies managing cryptocurrencies or other forms of digital assets, the Monetary Authority of Singapore said in response to questions from Bloomberg.

As with any other current or potential customer, banks are required to undertake customer due diligence measures to understand and manage the risk(s) they pose, the MAS said, without comment. the project. Banks decide for themselves whether to establish or continue a banking relationship with a customer, balancing commercial considerations against the company’s risk tolerance.

Even so, some companies in the country had already faced difficulties in opening bank accounts, as domestic lenders worried about possible illicit flows and other criminal activities.

Singapore has seen its fair share of crypto scandals from firms based in the country, like Terraform Labs and crypto hedge fund Three Arrows Capital. It is among the leading jurisdictions that have established a licensing regime for the industry and proposed more restrictions on crypto trading by retail investors.

–With help from Suvashree Ghosh.

2023 Bloomberg LP

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