The Monetary Authority of Singapore (MAS), the city-state’s central bank, is currently working on helping cryptocurrency startups receive banking services, but doesn’t plan on loosening its rules to lure more crypto startups to the country, the bank’s managing director told Bloomberg on October 9, 2018.
Helping Crypto Firms Set up Local Bank Accounts
(Source: Lunt Capital)
Singapore’s financial regulator is reportedly willing to lend a hand to cryptocurrency startups that are having problems setting up local bank accounts.
Monetary Authority of Singapore Managing Director Ravi Menon believes that the city-state has no interest in creating an extremely lax regulatory environment in order to attract cryptocurrency businesses. However, in an interview with Bloomberg News, Menon said that the country is actively working on bringing the banks and cryptocurrency fintech startups together to see if there is an understanding that can be reached.
And while Singapore has been pushing to develop its fintech sector in order to create more jobs and diversify its economy, its regulators have taken a rather cautious approach to exchanges and other aspects of the booming crypto industry.
Bloomberg reported that many crypto companies operating in Singapore have complained about a regulatory vacuum that makes it impossible for them to operate in the area. Most banks reportedly do not allow crypto startups to open local bank accounts, or have their existing accounts closed.
“The nature of this business is a bit different, so banks may need to employ other ways in which they can establish bona fide,” Menon said, adding that he doesn’t blame the banks for not opening accounts, as some of these companies’ activities can be “quite opaque.”
Singapore won’t be Introducing the Japanese Model Any Time Soon
According to Bloomberg, Singapore’s regulatory system for crypto lies somewhere between Japan, which has taken a welcoming approach, and China, which has issued an outright ban on exchanges and initial coin offerings.
However, the state has no plans to introduce a licensing system for crypto exchanges like the one established in Japan, Menon said. What it does is separate cryptocurrency activities into three separate categories in order to supervise the sector more efficiently.
According to Menon, the first category comprises of utility tokens, and it needs almost no regulation. The second category involves digital coins that share some characteristics with securities, and are governed by the Securities and Futures Act. Bloomberg reported that very few ICOs have crossed that boundary and operate successfully within the category.
The third group involves payment tokens such as bitcoin. However, as it turns out, the MAS doesn’t have a problem with the category, despite marking the tokens as “highly risky.”
“If they are not a security, then we don’t have a problem with it. We’ve seen quite a lot of ICO activity that is not security related,” Menon told the publication. “And there’s a lot of interesting business models out there trying to raise capital in interesting ways, which as far as the consumers are aware of what these are, we have no issues.”
Featured image by Aldo Crusher