Considering the numerous global repercussions of the industry, Singapore authorities are collaborating with local lenders to establish universal standards for vetting prospective clients from the crypto and digital asset sectors.
People with knowledge of the situation claim that the police and the central bank have been assisting banks to improve their account opening procedures for service providers in all categories of digital assets.
The project has been going on for approximately six months, and the persons, who asked to remain anonymous since the discussions are private, said that an industry report covering best practices in areas like due diligence and risk management may be issued in the following two months.
According to one of the people, this project, which focuses on businesses providing services in payments, trading, and transfers of these assets, will also cover stablecoin, non-fungible tokens, as well as transferable gaming or streaming credits. The people said that even with such standards, the banks’ appetites for risk would determine whether or not to accept these consumers.
The traditional banking sector has long had trouble providing easy access to the cryptocurrency market since many of them are still cautious of the volatility of digital assets and possible regulatory pressure, especially in the aftermath of high-profile failures at companies like FTX and Terraform Labs.
Clients are currently searching for new banks as a result of the failure of US lenders Silvergate Capital Corp. and Signature Bank, which offered payment services to crypto startups.
Banks independently decide whether to initiate or maintain a banking relationship with a customer by weighing business risk tolerance against commercial considerations.
However, certain businesses in the nation had previously had trouble getting bank accounts because local lenders were wary of potential illicit flows and other criminal activity.
Singapore has faced its fair share of crypto crises involving local businesses such as Terraform Labs and cryptocurrency hedge fund Three Arrows Capital. It is one of the important jurisdictions that has created a licensing system for the sector and has suggested more restrictions on cryptocurrency trading by retail investors.