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Singapore plans new guidance for banks on vetting crypto clients
SINGAPORE authorities are working with lenders in the city-state to set uniform standards on screening potential customers from the crypto and digital assets sectors, amid various global fallouts in the industry.
The central bank and police have been helping banks to fine-tune their vetting approach when opening accounts for service providers across all types of digital assets, sources said.
The project has been on for about six months, and an industry report outlining the best practices in areas like due diligence and risk management may be published in the next two months, the sources said, asking not to be identified because the discussions are private.
Stablecoin, non-fungible tokens as well as transferable gaming or streaming credits will also be covered under this initiative, which focuses on firms providing services in payments, trading and transfers of these assets, one source said. Even with such guidelines, the banks will decide whether to accept these clients based on their risk appetites, the sources said.
The crypto industry has long struggled for ready access to traditional banks, many of which remain wary of the volatility in digital assets and potential regulatory heat, particularly in the wake of high-profile failures at firms from FTX to Terraform Labs. The collapses of US lenders Silvergate Capital and Signature Bank, which provided payment services for crypto firms, have also sent clients scrambling for new banks.
There are no rules stopping banks operating in the country from doing business with firms handling cryptocurrencies or other forms of digital assets, the Monetary Authority of Singapore (MAS) said in response to queries from Bloomberg.
“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,” MAS said, without commenting on the project. “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.”
Even so, some firms in the country had previously faced difficulties opening bank accounts, as domestic lenders were concerned about potential illicit flows and other criminal activities.
Singapore has seen its fair share of crypto scandals from firms that were based in the country, such as Terraform Labs and crypto hedge fund Three Arrows Capital. It is among major jurisdictions that have established a licensing regime for the industry, and has proposed more curbs on crypto trading by retail investors. BLOOMBERG