New Guidance for Banks to Vet Crypto Clients in Singapore
• Singapore is working with banks to provide guidance for vetting crypto clients.
• The guidance will cover stablecoins, NFTs, and services in payments, trading, and transfers of these assets.
• Banks will decide whether to accept crypto clients based on their risk appetite.
Singapore Working on New Guidance for Crypto Clients
Singapore authorities are currently working with banks and other lenders to set uniform standards for vetting cryptocurrency clients. The central bank and police have been helping banks to work on their vetting process when opening accounts for service providers in the cryptocurrency and digital asset space. An industry report outlining best practices in areas like due diligence and risk management is expected soon.
What Will the Guidance Cover?
The guidance is set to cover stablecoin and NFTs as well as transferable gaming or streaming credits. It will focus on firms that provide services in payments, trading and transfers of these assets. Banks would have the final say in deciding whether to accept cryptocurrency clients based on their risk appetite.
Tighter Regulation Following Recent Turmoil
The guideline issued by Singaporean authorities could be considered a way of tightening regulation in the crypto space following recent high-class collapses, where numerous crypto companies lost billions of dollars. The collapse of Silvergate Bank, Signature Bank, and Silicon Valley Bank (SVB) has also resulted in some crypto clients scrambling for new banks. At the moment, Singapore government does not prevent banks from doing business with crypto companies.
Current Banking Situation for Crypto Companies
Currently, many international financial institutions still do not offer banking services to local cryptocurrency exchanges or blockchain projects due to lack of regulatory clarity or high costs associated with compliance procedures required by regulators such as Anti Money Laundering (AML) policies or Know Your Customer (KYC). As a result, many exchanges have had to resort to using third-party payment processors that are not subject to AML/KYC compliance regulations but come at a higher transaction cost than traditional banking solutions would offer them if they were part of the regulated banking system..
In conclusion, Singapore is taking steps towards issuing guidance that could help create a more secure environment for banks dealing with cryptocurrencies by making sure that all transactions are compliant with applicable laws and regulations. This move should give more confidence both sides – i.e., financial institutions providing services to crypto customers as well as investors looking into investing into digital assets from an institutional standpoint – resulting in increased adoption rates overall.