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Singapore authorities are working with banks on new guidance for vetting crypto clients.
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The guidance will cover stablecoins, nonfungible tokens (NFTs) and firms providing services in payments, trading and transfers of these assets.
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Banks will decide whether they want to take on crypto clients based on their risk appetite.
Singapore Collaborating to Create New Rules for Crypto Clients
Singaporean authorities are currently collaborating with banks and other lenders to set up uniform criteria when vetting cryptocurrency clients, according to sources close to the matter that spoke with Bloomberg.
The report states that the central bank and police have been guiding banks to establish their process when opening accounts for digital asset service providers.
Sources have stated that the project has been underway for about six months and authorities are expected to publish an industry report on the proper procedures in areas like due diligence and risk management. The sources requested to remain anonymous as the conversation has yet to go public.
The framework will cover stablecoin and NFTs as well as transferable gaming or streaming credits. The initiative is set to focus on firms that provide services in payments, trading and transfers of these assets.
Banks will then decide if they want to start or continue a relationship with a customer based on their risk appetite, the sources added.
Recent Developments Prompting Regulation
The guideline to be issued by Singaporean authorities could be seen as an effort to tighten regulation in the crypto space following the recent turbulence.
Last year, multiple crypto companies, including FTX and Terraform Labs, went under, resulting in the loss of billions of dollars.
The recent failure of Silvergate Bank, Signature Bank, and the Silicon Valley Bank (SVB) has also caused some crypto clients to search for new banks.
At the moment, the Singaporean government doesn’t stop banks operating in the country to do business with crypto companies.
When speaking to Bloomberg, the Monetary Authority of Singapore said;
“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. 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.”
Singapore is no stranger to cryptocurrency scandals. A number of the recently collapsed companies, including Terraform Labs and crypto hedge fund Three Arrows Capital, were based in Singapore.
