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.

SEE ALSO: Bitcoin emerges as crisis currency in hotspots such as Zimbabwe

 

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."

BLOOMBERG

Ref:http://www.businesstimes.com.sg/banking-finance/singapore-cryptocurrency-firms-facing-bank-account-closures

Regulation

Oct 8, 2017 |

Samuel Haig

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.

Also Read: Singapore-Based Bitcoin Startups Deal With Bank Account Closures

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!

Ref:https://news.bitcoin.com/singapore-to-regulate-cryptocurrency-based-businesses-not-cryptocurrency-itself/

 

Singapore not rushing to regulate cryptocurrencies: MAS

Thu, Oct 26, 2017 - 5:50 AM

Jacquelyn Cheokjaccheok@sph.com.sg@JacCheokBT

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.

SEE ALSO: DBS, OCBC yet to dip toes in corporate VC pond

 

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.

Ref:http://www.businesstimes.com.sg/technology/singapore-not-rushing-to-regulate-cryptocurrencies-mas

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.

Ref:http://www.mas.gov.sg/News-and-Publications/Parliamentary-Replies/2017/Prevalence-use-of-cryptocurrency-in-Singapore.aspx

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."

Ref:http://www.straitstimes.com/business/banking/some-cryptocurrency-firms-had-their-singapore-bank-accounts-closed