Singapore and Local Banks Refine Vetting Process for Crypto Clients
- The initiative focuses on firms that offer services in payments, trading, and transfers of digital assets.
- Singapore’s stable banking system provides a secure partner for crypto firms.
Singapore authorities are collaborating with local lenders to create a set of standardized screening criteria for potential clients in the digital asset and cryptocurrency industries amid the current global disruptions. The country’s central bank and police have been assisting banks in refining their vetting process when opening accounts for digital asset service providers, according to the sources who told Bloomberg.
The initiative focuses on firms that offer services in payments, trading, and transfers of digital assets, including stablecoins, non-fungible tokens, and transferable gaming or streaming credits. The project, which has been ongoing for six months, aims to publish a report outlining best practices within the next two months. Despite these guidelines, banks will ultimately decide whether to accept these clients based on their risk appetites.
The country’s Central Bank, the Monetary Authority of Singapore (MAS), offers clear guidance on regulation and allows banks to do business with crypto firms without restrictions, stating:
“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.”
This move comes as cryptocurrency companies struggle with banking challenges following the collapse of crypto-friendly lenders like Signature Bank, Silvergate Capital, and Silicon Valley Bank. While US banks face regulatory pressure to stop servicing crypto clients, Singapore’s banking sector has taken a positive approach to the industry.
Singapore’s stable banking system provides a secure partner for crypto firms, with major global banks such as DBS, Standard Chartered Bank, HSBC, and UOB undertaking initiatives like Project Guardian to explore the use of blockchain technology in making existing financial systems more efficient.
Although Singapore’s banking sector is receptive to the cryptocurrency industry, some local firms have faced challenges opening bank accounts due to concerns about potential illicit activities in light of the recent crypto scandals involving Terraform Labs and Three Arrows Capital.