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Saturday, November 18, 2017
Singapore cryptocurrency firms facing bank account closures!
[SINGAPORE] Singapore banks have closed accounts of several companies
which specialise in providing cryptocurrency and payments services,
according to two local bodies which represent financial-technology
firms.
Noting that cryptocurrency firms have had similar problems
with their banks in other countries, the head of Singapore's
Cryptocurrency and Blockchain Industry Association, or Access, asked the
government to step in.
"From our analysis, it appears to be
common among leading FinTech hubs," Access chairman Anson Zeall said in
an emailed statement.
"If this is the case, we would urge
Singapore to take a leadership role and demonstrate how to come to an
effective resolution among all parties.
Mr
Zeall said his organisation had heard from 10 companies which had
encountered problems with their banking relationships in Singapore. The
banks didn't give a reason for their action, Mr Zeall added.
The complaints illustrate some of the difficulties faced
by cryptocurrency firms at a time when the sector is under growing
scrutiny around the world. China has said it will halt exchange trading
of cryptocurrencies by the end of September.
JPMorgan Chase &
Co chief executive officer Jamie Dimon recently described the
cryptocurrency bitcoin as a fraud and said he would fire any employee
trading it for being "stupid".
ACCOUNT CLOSURES
The
Monetary Authority of Singapore, the country's central bank, said in a
statement that it doesn't interfere with commercial decisions taken by
banks "including those in relation to the establishment and termination
of business relationships".
Banks are expected to establish
suitable procedures and controls, including those governing customer
transactions and relationships, and to comply with customer due
diligence requirements of MAS rules on preventing money laundering and
the financing of terrorism, the statement added.
Chia Hock Lai,
president of the Singapore Fintech Association, which has broader
membership than Access, said some of his organisation's members also
experienced account closures, though he didn't provide figures.
Neither
organisation named the banks which had closed their member firms'
accounts, but Access said the action had been taken by a "range of
financial institutions".
Access has 106 members and the Fintech
Association has 185, though the two organisations said some companies
belong to both groups.
COINHAKO BLOG
One local
cryptocurrency-related firm, CoinHako, said in a blog post earlier this
month that its bank account had been closed by DBS Group Holdings Ltd,
South-east Asia's largest bank. CoinHako, which provides cryptocurrency
and digital assets wallet services, said in the blog it would be no
longer able to process deposits and withdrawals in Singapore dollars as a
result.
"We understand that banks also have their concerns on
anti-money laundering and know-your-customer issues," said Yusho Liu,
co-founder of Singapore-based CoinHako.
"We do not fit anywhere in the current regulatory framework."
DBS declined to comment on CoinHako, citing banking secrecy, though it
said any decision to close a customer's account could be due to multiple
factors. Those include "failure to maintain the account in good
standing, failure to provide timely and accurate information,
unexplained inconsistencies in account behaviour, or unacceptable risk
of criminal or terrorist behaviour," DBS said in an emailed response to
questions.
"We remain open to exploring banking relationships with companies working with cryptocurrencies," DBS added.
Koh
Ching Ching, a spokeswoman for Oversea-Chinese Banking Corp, said the
bank reviews customer accounts for risk management purposes "and may
close these accounts for various reasons".
United Overseas Bank Ltd, the third of the large Singapore banks, declined to comment.
FINTECH FESTIVAL
The
MAS has said it will regulate the offer or issue of digital tokens if
they constitute products regulated under the Securities and Futures Act.
It doesn't regulate virtual currencies per se, a similar position to
that taken by central banks and regulators in other countries.
The
MAS has also taken a leading role in efforts to promote Singapore as a
regional centre for financial technology, and is one of the organisers
of a 'fintech festival' due to take place in November.
Last
year's event drew more than 10,000 attendees. The MAS has also been
working on a distributed ledger project and on the creation of a central
bank digital currency, to be used for cross-border payments.
In its statement, the MAS said it "remains committed to developing Singapore as a reputable financial center and fintech hub."
It said that requires "pairing a progressive and nurturing environment
for fintechs together with strong controls to mitigate risks such as
fraud and money laundering".
"We must be mindful that new
technological developments and products bring with them new areas of
risks, which the financial industry and regulatory authorities should
pay heed to."
Singapore to Regulate Crypto-Based Businesses, Not Cryptocurrency Itself
Mr. Tharman Shanmugaratnam, Singapore’s Deputy Prime
Minister, Coordinating Minister for Economic and Social Policies, and
Chairman of Singapore’s financial watchdog, the Monetary Authority of
Singapore (MAS), has responded to a question pertaining to MAS’s
assessments and regulatory intentions regarding cryptocurrencies and
initial coin offerings (ICOs). Mr. Shanmugaratnam replied by stating
that the Singaporean regulator did not recognize bitcoin as legal
tender, and that the MAS will likely seek to regulate companies
providing bitcoin payment services, rather than the cryptocurrency
itself.
The MAS Does Not Intend to Develop a Distinct Regulatory Apparatus for Cryptocurrency
In response to a parliamentary question
regarding the MAS’s regulatory conclusions and assessments pertaining
to cryptocurrency, Mr. Shanmugaratnam stated that the MAS has determined
cryptocurrency and ICOs to fall outside of its current financial
legislation.
The question to which the MAS chairman responded asked “whether the
Government is keeping track of the use/investment of cryptocurrencies
such as bitcoin in Singapore; (b) how do cryptocurrencies affect our
finance industry; (c) whether studies are being conducted to assess the
problems and risks of using/investing in cryptocurrencies; and (d)
whether regulatory frameworks are necessary in the future.”
“MAS has been monitoring the use of… virtual currencies.” – Mr. Shanmugaratnam, Chairman of MAS
The MAS chairman responded with a number of points, first stating
that Singapore’s central bank has concluded that cryptocurrency is not
legal tender. The deputy prime minister defined legal tender as “the
medium of exchange is recognized by law to be valid for meeting a
financial obligation.”
Mr. Shanmugaratnam states that the “MAS has been monitoring the use
of… virtual currencies.” The deputy prime minister states that the
financial regulator has determined that virtual currency “use is not
prevalent in Singapore” estimating that “about 20 Singapore retailers
like restaurants and online shops currently accept bitcoins”, adding
that “in the Singapore[an] financial industry, use of virtual currencies
as a mode of payment is not significant.” The MAS is concluding that
cryptocurrency “trading is generally for speculative investment
purposes,” noting however that Singapore’s trading volume is
significantly lower than that which is produced by the dominant markets
of the U.S., Japan, and Hong Kong.
Singapore’s Financial Regulator Recently Issued a Statement Pertaining to ICOs
Regarding regulations, Mr. Shanmugaratnam stated that “MAS does not
regulate… virtual currencies… However… regulates the activities that
surround them if those activities fall within our more general ambit as
financial regulator.” Mr. Shanmugaratnam also revealed that the MAS is
currently developing new regulations for payment services designed to
address the money laundering and terrorist financing risks associated
with “the anonymous nature of [cryptocurrency] transactions.”
The deputy prime minister indicated that a similar regulatory
approach would likely be applied to ICOs, stating that the “MAS has not
issued new legislation specifically for ICOs”. Mr. Shanmugaratnam
iterated that digital tokens through ICOs that are determined to
comprise securities will be subject to the regulatory requirements of
securities – including having to register a prospectus, obtain
intermediary or exchange operator licenses, and mandatory compliance
with anti-money laundering and anti-terror financing laws. Mr.
Shanmugaratnam stipulated that the monetary authority of Singapore “will
continue to monitor the developments of [the ICO industry], and
consider more targeted legislation if necessary.”
In recent weeks, reports have detailed that
numerous bitcoin-based startups domiciled in Singapore have experienced
bank account closures
due to uncertainty pertaining to the legal status of cryptocurrency.
The statement comes approximately two months after the MAS first sought
to clarify
its regulatory position regarding ICOs, asserting that token deemed to
comprise securities would fall under the purview of existing
regulations.
Do you think that Singapore’s plan to avoid developing
unique regulations for cryptocurrencies will be viable long term? Share
your thoughts in the comments section below!
Singapore doesn't plan to regulate cryptocurrencies such as bitcoin,
but will remain alert to money laundering and other potential risks
stemming from their use, the head of the country's central bank said. PHOTO: REUTERS
THE Monetary Authority of Singapore (MAS) on Wednesday reiterated
that Singapore would be slow to regulate cryptocurrencies - a move that
industry players said could actually be good for the growth of the
cryptocurrency and blockchain sector here, and for making Singapore the
region's cryptocurrency hub.
MAS managing director Ravi Menon said: "As of now, I see no basis for
wanting to regulate cryptocurrencies." Even so, MAS will remain alert
to money laundering and other potential risks stemming from their use,
he told Bloomberg in an interview.
Mr Menon added that the central bank's focus is to "look at the
activities surrounding the cryptocurrency and asking ourselves what
kinds of risks they pose, which risks would require a regulatory
response, and then proceed from there".
This stance is unchanged from three years ago, when MAS declared that
it would regulate virtual currency intermediaries in Singapore to
address potential money laundering and terrorist financing risks. In
that announcement made in March 2014, MAS said that it would not
regulate virtual currencies per se, as these were not considered as
securities or legal tender.
Industry players were quick to point out that MAS' stance was not
new, but that Mr Menon mentioned initial coin offerings (ICOs) - a
currently unregulated means of crowdfunding that allows companies to
issue their own digital tokens that can be bought by investors using
cryptocurrencies - marked a good step forward for the industry.
Anson Zeall, chairman of Access, an association representing
companies involved in blockchain and cryptocurrencies in Singapore, told
The Business Times: "ICOs were mentioned - this is very positive. It
was also mentioned that ICOs would be studied on a case-by-case basis to
determine if they should be regulated, which is an enlightened move."
Mr Menon had told Bloomberg that if ICOs include the promise of a
dividend or other economic benefits, they can resemble regular
securities offerings and would be covered by Singapore's Securities and
Futures Act. He also noted the existence of other ICO business models
that "avoid these security-like features in their digital tokens".
He said: "So we just have to look at them case by case to see which
ones we will need to bring into the regulatory ambit, and which ones can
stay outside."
MAS's attitude is unlike that of China, which in September
dramatically imposed a ban on all ICOs, declaring them illegal and
calling an immediate halt to all fund-raising activities. Less than a
month later, South Korea followed suit, banning fund raising through all
forms of ICOs.
An operator of a cryptocurrency crowdfunding platform told BT: "China
went quite extreme. While Singapore is sitting on the fence as usual,
there is really little benefit for us to be one of the first to stick
our necks out. Even the US hasn't clarified its position. If Singapore
can play this right - having seen how it plays out globally - we can
become the leading fund raising capital in Asia."
On Wednesday, MAS and the Hong Kong Monetary Authority signed an
agreement to boost bilateral cooperation on financial technology
matters, which would include blockchain and cryptocurrencies. Both
parties will work on a strategic project on cross-border trade finance
infrastructure - based on distributed ledger technology - as their first
collaborative initiative.
Altona Widjaja, vice-president of the fintech and innovation group at
OCBC, told BT that blockchain is a technology that the bank will
continue to explore as it "shows great promise", such as the
proof-of-concept for a KYC (Know Your Customer) blockchain that OCBC had
completed with two other banks earlier this month.
Mr Widjaja said: "While we welcome the regulation of
cryptocurrencies, we also welcome the opportunity to test cross-border
blockchain transactions, and we will closely monitor the applications of
blockchain."
Blockchain - an incorruptible digital ledger of all economic
transactions made in virtual currencies - is the technology that enables
the existence of cryptocurrency.
Access' Mr Zeall said: "But while all blockchain developments are
great, it's important for blockchain and fintech startups in both cities
to get sustainable banking partners to support their innovation
efforts."
Last month, at least 10 companies that provide cryptocurrency payment
and trading services were reported to have encountered bank account
closures in Singapore, rendering many of these "blockchain disruptors"
unable to continue their operations here and relocating to the US and
Japan.
Reply to Parliamentary Question on the prevalence use of
cryptocurrency in Singapore and measures to regulate cryptocurrency and
Initial Coin Offerings
QUESTIONS NO 1494
NOTICE PAPER 869 OF 2017
FOR WRITTEN ANSWER
Date: For Parliament Sitting on 2 October 2017 Name and Constituency of Member of Parliament Mr Saktiandi Supaat, MP, Bishan-Toa Payoh GRC
Question: To ask the Minister for Finance (a) how prevalent is the use
of cryptocurrency in Singapore; and (b) what measures will MAS introduce
to regulate Initial Coin Offerings (ICOs).
Answer by Mr Tharman Shanmugaratnam, Deputy Prime Minister and Minister in charge of MAS:
1. We are familiar with money, i.e., notes and coins, as a medium of
exchange – an intermediary instrument use to facilitate transactions. I
make a TV, sell it for money, and then use it to buy a pair of shoes.
Money becomes a medium of exchange because all of us put our trust in
its reliability. The Central Bank issues these notes and coins, and
makes them legal tender. Legal tender means that the medium of exchange
is recognised by law to be valid for meeting a financial obligation.
2. With advancement in technology, new virtual means of payment have
emerged, such as cryptocurrency, which is a form of digital token
secured by cryptography. They are not legal tender. But some people put
their trust in them and use them as a means of payment. Hence, Bitcoin
and Ether have been adopted by people in some communities to pay one
another or to pay for goods and services.
3. MAS has been monitoring the use of such virtual currencies. Their
use is not prevalent in Singapore - about 20 Singapore retailers like
restaurants and online shops currently accept Bitcoins1. This
is unlike places like Japan, where the use is more popular. Likewise,
in the Singapore financial industry, use of virtual currencies as a mode
of payment is not significant. Trading is generally for speculative
investment purposes, and the volume is low2 compared to other countries such as US, Japan and Hong Kong.
4. Similar to most jurisdictions, MAS does not regulate such virtual
currencies per se. However we regulate the activities that surround them
if those activities fall within our more general ambit as financial
regulator. Let me give two examples.
5. First, virtual currencies, due to the anonymous nature of the
transactions, can be exploited for money laundering and terrorism
financing risks. MAS is working on a new payment services regulatory
framework that will address these risks.
6. A second example is fund-raising. Virtual currencies can go beyond
being a means of payment, and evolve into “second generation” tokens
representing benefits such as ownership in assets, like a share or bond
certificate. The sale of such “second generation” tokens to raise funds
is commonly known as an initial coin offering or ICO (“ICO”). A number
of ICOs have been structured out of Singapore in recent months.
7. These are financial activities that falls under MAS’ regulatory
ambit. Hence, on 1 August 2017, MAS clarified that if a token is
structured in the form of securities, the ICO must comply with existing
securities laws aimed at safeguarding investors’ interest. So the
requirements of having to register a prospectus, obtain intermediary or
exchange operator licences, will apply. These intermediaries must also
comply with existing rules on anti-money laundering and countering
terrorism financing.
8. MAS has not issued new legislation specifically for ICOs. We will
continue to monitor the developments of such offers, and consider more
targeted legislation if necessary.
9. Some consumers may be attracted to invest in virtual currencies
and digital tokens due to their recent exponential rise in value.
However, as a financial regulator, our focus is securitised interests in
assets – such as shares in a company. MAS does not and cannot regulate
all products that people put their money in thinking that they will
appreciate in value. But recognising that the risks of investing in
virtual currencies are significant, MAS and the Commercial Affairs
Department have published an advisory alerting consumers to these risks,
and are working together to raise public awareness of potential scams.
***
1This is based on the directory maintained by Coin Republic of bitcoin-related businesses in Singapore (http://coinrepublic.com) 2Based on virtual currency exchanges data.
Some cryptocurrency firms had their Singapore bank accounts closed
The
complaints illustrate some of the difficulties faced by cryptocurrency
firms at a time when the sector is under growing scrutiny around the
world.
Published Sep 26, 2017,
SINGAPORE (BLOOMBERG) - Singapore banks have closed accounts of
several firms which specialise in providing cryptocurrency and payments
services, according to two local bodies which represent
financial-technology firms.
Noting that cryptocurrency firms have had similar problems with banks
in other countries, the head of Singapore's Cryptocurrency and
Blockchain Industry Association, or Access, asked the Government to step
in.
"From our analysis, it appears to be common among leading FinTech
hubs," Access chairman Anson Zeall said in an e-mailed statement. "If
this is the case, we would urge Singapore to take a leadership role and
demonstrate how to come to an effective resolution among all parties.
Mr Zeall said his organisation had heard from 10 companies which had
encountered problems with their banking relationships in Singapore. The
banks did not give a reason for their action, he added.
The complaints illustrate some of the difficulties faced by
cryptocurrency firms at a time when the sector is under growing scrutiny
around the world. China has said it will halt exchange trading of
cryptocurrencies by the end of the month.
JPMorgan Chase chief executive officer Jamie Dimon recently described
the cryptocurrency bitcoin as a fraud and said he would fire any
employee trading it for being "stupid".
The Monetary Authority of Singapore (MAS), the country's central
bank, said in a statement that it does not interfere with commercial
decisions taken by banks, "including those in relation to the
establishment and termination of business relationships".
Banks are expected to establish suitable procedures and controls,
including those governing customer transactions and relationships, and
to comply with customer due diligence requirements of MAS rules on
preventing money laundering and the financing of terrorism, the
statement added.
Mr Chia Hock Lai, president of the Singapore Fintech Association,
which has broader membership than Access, said some of his
organisation's members also experienced account closures, though he did
not provide figures.
Neither organisation named the banks which had closed their member
firms' accounts, but Access said the action had been taken by a "range
of financial institutions". Access has 106 members and the Fintech
Association has 185, though the two organisations said some companies
belong to both groups.
The MAS has said it will regulate the offer or issue of digital
tokens if they constitute products regulated under the Securities and
Futures Act. It does not regulate virtual currencies per se, a similar
position to that taken by central banks and regulators in other
countries.
Yesterday, the MAS also said that it "remains committed to developing
Singapore as a reputable financial centre and fintech hub. It is
important to recognise that sustaining Singapore's hub status requires
pairing a progressive and nurturing environment for fintechs together
with strong controls to mitigate risks such as fraud and money
laundering".
It said: "We must be mindful that new technological developments and
products could bring with them new areas of risks, which the financial
industry and regulatory authorities should pay heed to".
The spokesman said: "Maintaining Singapore's reputation as a trusted
hub will allow all players (traditional and disruptors) to flourish."
Mr. Tharman Shanmugaratnam, Singapore’s Deputy Prime
Minister, Coordinating Minister for Economic and Social Policies, and
Chairman of Singapore’s financial watchdog, the Monetary Authority of
Singapore (MAS), has responded to a question pertaining to MAS’s
assessments and regulatory intentions regarding cryptocurrencies and
initial coin offerings (ICOs). Mr. Shanmugaratnam replied by stating
that the Singaporean regulator did not recognize bitcoin as legal
tender, and that the MAS will likely seek to regulate companies
providing bitcoin payment services, rather than the cryptocurrency
itself.
In response to a parliamentary question
regarding the MAS’s regulatory conclusions and assessments pertaining
to cryptocurrency, Mr. Shanmugaratnam stated that the MAS has determined
cryptocurrency and ICOs to fall outside of its current financial
legislation.
The MAS chairman responded with a number of points, first stating
that Singapore’s central bank has concluded that cryptocurrency is not
legal tender. The deputy prime minister defined legal tender as “the
medium of exchange is recognized by law to be valid for meeting a
financial obligation.”
Regarding regulations, Mr. Shanmugaratnam stated that “MAS does not
regulate… virtual currencies… However… regulates the activities that
surround them if those activities fall within our more general ambit as
financial regulator.” Mr. Shanmugaratnam also revealed that the MAS is
currently developing new regulations for payment services designed to
address the money laundering and terrorist financing risks associated
with “the anonymous nature of [cryptocurrency] transactions.”
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