Date
22 October 2018
A view of Ducatus cafe in Singapore, the first cashless cafe that accepts cryptocurrencies in the city. Singapore authorities are reportedly willing to lend a hand to crypto startups in relation to banking services. Photo: Reuters
A view of Ducatus cafe in Singapore, the first cashless cafe that accepts cryptocurrencies in the city. Singapore authorities are reportedly willing to lend a hand to crypto startups in relation to banking services. Photo: Reuters

Singapore to help crypto firms set up local bank accounts

The Monetary Authority of Singapore (MAS), the city-state’s central bank and financial regulator, is reportedly working on helping cryptocurrency firms set up local bank accounts and receive banking services.

Ravi Menon, managing director of the MAS, told Bloomberg in an interview that authorities are looking to bring banks and cryptocurrency fintech startups together “to see if there is some understanding they can reach.”

However, he insisted that the government has no plan to loosen rules to lure more crypto startups to the city.

Crypto businesses are not widely welcomed by traditional banks and lenders around the world due to its high-risk business nature and the difficulty to meet banks’ compliance standards, as well as the potential use of the cryptocurrency in money laundering and financial crime. And crypto firms have been complaining that they are unable to open local bank accounts, or maintain the accounts.

Menon said in the interview that he agreed that financial firms exercise caution in dealing with the crypto industry, because some aspects of the industry could appear “obscure and dangerous” to both regulators and financial institutions.

Asked about the development of Singapore’s regulatory system for crypto businesses, Menon told Bloomberg that the city-state has no plans to introduce the “Japanese model,” referring to a licensing system for crypto exchanges.

Japan has been taking a welcoming approach for crypto businesses, with 16 exchanges having registered with the authorities and getting a green light for banking support so far.

Instead, Singapore authorities put cryptocurrency activities into three categories for supervision. According to Menon, one category is the “utility tokens” which hardly need any regulation. Another category involves “payment tokens” such as Bitcoin, which are “highly risky”, as Menon described in the interview.

The remaining category involves digital tokens that have the characteristics of securities, and they will be governed by Singapore’s Securities and Futures Act (SFA).

Menon pointed out that there are few initial coin offering projects crossing that boundary, “[SFA] would actually make most of their business models unviable,” he said, adding that most of them are carefully steering clear of that boundary.

“If they are not a security, then we don’t have a problem with it,” he said. “There’s a lot of interesting business models out there trying to raise capital in interesting ways, which as far as the consumers are aware of what there are, we have no issues.”

Menon added, “You can’t expect the government or the regulator to regulate all manner of items in which people put their money.”

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BN/RC

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