Over the last six months, traditional banks in Singapore have been collaborating with regulators to establish consistent criteria for vetting prospective clients in the crypto industry.
According to a report published on April 6, the Monetary Authority of Singapore (MAS) has teamed up with local police to improve the onboarding process for digital asset service providers’ accounts by domestic banks. The results and findings of their joint efforts on risk management and due diligence, spanning over six months, will be disclosed within the next two months.
MAS representatives clarified that banks assess whether to establish or maintain a banking relationship with a customer based on their evaluation of commercial considerations and risk tolerance, as there are currently no rules prohibiting banks from working with digital asset providers.
Singapore has positioned itself as a leading hub for cryptocurrency businesses with its adaptable tax policies, access to a diverse pool of tech talent, and strategic location in the Asian time zone.
In October 2022, the central bank of Singapore introduced strict guidelines for Digital Payment Token (DPT) service providers to discourage impulsive cryptocurrency trading. These guidelines include prohibiting retail users from borrowing or accepting credit card payments to purchase crypto, banning crypto-related incentives such as free tokens, gifts, or celebrity endorsements, and mandating customer testing to assess their awareness of the risks associated with cryptocurrencies.
The proposed regulations were created in response to the collapse of stablecoin TerraUSD and its associated token LUNA, which led to the insolvency of numerous significant players in the cryptocurrency sector, including lender Celsius and hedge fund Three Arrows Capital (3AC).
Local law enforcement is currently conducting an inquiry into the defunct Terraform Laboratories and its co-founder, Do Kwon. The demise of the Terra ecosystem resulted in losses of roughly $40 billion in the cryptocurrency market.
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