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Singapore authorities are working with banks on new guidance for vetting crypto clients.
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The guidance will cover stablecoins, nonfungible tokens (NFTs) and firms providing services in payments, trading and transfers of these assets.
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Banks will decide whether they want to take on crypto clients based on their risk appetite.
Singapore working on new guidance for crypto clients
Singapore authorities are currently working with banks and other lenders to set uniform standards for vetting cryptocurrency clients, sources close to the matter told Bloomberg.
According to the report, the central bank and police have been helping banks to work on their vetting process when opening accounts for service providers in the cryptocurrency and digital asset space.
Sources told Bloomberg that the project has been ongoing for roughly six months, and the authorities would soon release an industry report outlining best practices in areas like due diligence and risk management. The sources preferred to stay anonymous as the discussion has not yet gone public.
The initiative is set to cover stablecoin and NFTs as well as transferable gaming or streaming credits. The initiative is set to focus on firms that provide services in payments, trading and transfers of these assets.
Banks would have the final say in deciding whether to accept cryptocurrency clients based on their risk appetite, the sources added.
Tighter regulation following the recent turmoil
The guideline to be issued by Singaporean authorities could be considered a way of tightening regulation in the crypto space following the recent high-class collapses.
Last year, numerous crypto companies, including FTX and Terraform Labs, collapsed, resulting in the loss of billions of dollars.
The recent collapse of Silvergate Bank, Signature Bank, and the Silicon Valley Bank (SVB) has also put resulted in some crypto clients scrambling for new banks.
At the moment, the Singaporean government doesn’t stop banks operating in the country to do business with crypto companies.
While talking to Bloomberg, the Monetary Authority of Singapore said;
“As with any other current or prospective customer, banks are required to conduct customer due diligence measures to understand and manage the risk(s) posed by them. Banks make their own determination of whether to start or continue a banking relationship with a customer, balancing between commercial considerations and business risk tolerance.”
Singapore is not new to cryptocurrency scandals. Some of the recent high-profile companies that collapsed, including Terraform Labs and crypto hedge fund Three Arrows Capital, were headquartered in Singapore.