Singapore’s Monetary Authority (MAS) has been working together with local banks for the past six months to create uniform standards for screening potential customers from the crypto industry. The aim is to optimize the procedures for opening accounts of digital asset service providers, with the results of this collaboration set to be published in the next two months.
Scope of the Guidelines
The guidelines will not only cover digital currencies but also stablecoins, nonfungible tokens (NFTs), and transferable gaming or streaming credits. While banks will be free to use their own discretion in deciding whether or not to work with digital asset providers, the guidelines are expected to provide a framework for conducting due diligence and managing risk.
Singapore’s Appeal for Crypto Businesses
Singapore has become a favored destination for crypto businesses because of its flexible tax policies, access to diverse tech talent, and convenient location. These factors allow companies to operate smoothly within the region in Asian time zones. Despite the growing number of digital asset service providers, there are currently no rules prohibiting banks from working with them.
MAS’ Recent Proposal and Probe
In late 2022, the MAS proposed banning digital payment token service providers from offering “any credit facility” to consumers, including both fiat and cryptocurrencies. This move sparked opposition from local crypto lobbyists. Currently, local enforcers are conducting an investigation into the failed Terraform Labs and its co-founder, Do Kwon. The subsequent collapse of the Terra ecosystem caused a major implosion in the digital asset market, with losses of nearly $40 billion.
The new guidelines are expected to provide much-needed clarity and consistency for banks working with digital asset service providers. While these guidelines will not be binding, they are expected to set the standard for how banks should manage risk and conduct due diligence. The collaboration between the MAS and banks highlights the growing importance of regulating the crypto industry in Singapore. As the crypto market continues to grow, it is likely that regulators will keep a closer eye on the industry to protect consumers and prevent financial instability.