It hasn’t been the easiest year for cryptocurrencies globally, in terms of their relationship with government regulators. The very nature of the way they function makes them extremely hard to monitor and regulate from the regulatory bodies’ viewpoint, as they often find the concept of cryptocurrencies hard to define.
The latest flurry of local news revolves around alleged reports that Singapore banks have been closing the accounts of companies that specialise in providing cryptocurrency and payments services. We take a look at some of the reasons behind this to find out if the response is a justified one.
Singapore’s Stand on Cryptocurrencies
We covered this topic in a previous article and noted that the Monetary Authority of Singapore (MAS) has maintained a relatively measured attitude towards the phenomenon. This is in line with the country’s position as a global financial hub. Their stand is that our current securities regulatory framework requires that any offering of shares, debt instruments, or units in a collective scheme will have to comply with prospectus or exemption requirements (if any are applicable).
As with any such news, headlines in major publications have been anything but complimentary. According to Anson Zeall, the head of Singapore’s cryptocurrency and blockchain industry association (Access), more than 10 companies have had issues with Singapore banking institutions. The banks did not provide reasons for these account closures. The association has asked the government to step in and act as a mediator to create a mutual resolution to the issue at hand.
Where The Responsibility Lies
If Singapore banks have been (allegedly) closing accounts, one can rest assured that they would have their just reasons for doing so. It should be noted that the fear of the cryptocurrency trade being used for money laundering as well as terrorism is a global and extremely real threat.
Singapore does rank highly as a country that facilitates business, and it is still committed to positioning itself as a fintech hub, but regulators have to do their job of maintaining the status quo. Meanwhile, banks have to work closely with governing bodies to ensure that law and order are maintained.
The Monetary Authority of Singapore released a statement regarding the issue, stating that, “although it doesn’t interfere with commercial decisions taken by banks… they are expected to establish suitable procedures and controls, including those governing customer transactions and relationships, and to comply with customer due diligence requirements”.
The above statement puts the responsibility in the hands of the banks, as they need to ensure that all funds processed through their facilities meet the compliance measures set up by the regulatory body.
Government Intervention on a Global Scale
Singapore has not set the precedence for such intervention by any means. Issues within the world of cryptocurrencies have already taken place in Korea and China. Wary of blockchain technology-driven companies that have been amassing large amounts of capital, both governments have banned ICOs.
The cryptocurrency world will continue to face such issues until government bodies are able to categorise them under specific regulatory parameters. It should also be conceded that the industry needs to be under constant scrutiny due to its nature of being a potential vehicle for criminal activities. It would be wise for those involved in the industry to note that compliance is the only way forward.
This is part of an ongoing series of articles about cryptocurrency. Check out our other articles here.