• Singapore authorities are working with banks to issue new guidance for vetting crypto clients.
• The guidance will cover stablecoins, NFTs and firms providing services in payments, trading and transfers of these assets.
• Banks will decide whether they want to take on crypto clients based on their risk appetite.
Singapore Issues New Guidance for Banks on Vetting 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 develop their vetting process when opening accounts for service providers in the cryptocurrency and digital asset space.
What is Covered by the Guidance?
The initiative is set to cover stablecoin and non-fungible tokens (NFTs) as well as transferable gaming or streaming credits. It also focuses on firms that provide services in payments, trading and transfers of these assets.
Risk Appetite Decides Whether to Accept Clients
Banks will have the final say in deciding whether they want to take on crypto clients based on their risk appetite. This guideline is being issued by Singaporean authorities following the recent high-class collapses of numerous crypto companies resulting in billions of dollars lost.
At present, the Singaporean government doesn’t prohibit banks operating in the country from doing business with crypto companies. However, a licesning framework has been proposed which would require financial institutions dealing with cryptocurrencies to adhere to strict anti-money laundering (AML) rules and customer due diligence protocols similar to those already established for fiat currency transactions or investments .
The new guidance issued by Singaporean authorities is set out help banks understand better how best to vet cryptocurrency clients while also protecting them from potential risks associated with volatile markets or fraudulent activities related to digital assets. With this move towards stricter regulations, it remains unclear if this move will be welcomed by investors or drive businesses away from the country altogether