We take look at the implications of the recent news revolving around Singapore Banks allegedly closing cryptocurrency-related accounts:
In line with the usual uproar that comes with any authoritative measures threatening to disrupt the business world, major publications have had a field day with this one. It was reported in mid-September that local banks have been closing accounts that were associated with the cryptocurrency trade.
From the flurry of information on the subject, over 10 companies in the industry have allegedly had issues with Singaporean banking institutions – according to Anson Zeall, head of Singapore’s cryptocurrency and blockchain industry association (Access). The association has also asked the Singapore government to step in and act as a mediator to create a mutual resolution to the issue at hand.
Regulators stand on the industry
The Monetary Authority of Singapore’s stand on cryptocurrencies has been measured, yet transparent. They rightfully stand by current securities regulatory frameworks that require all offerings of shares, debt instruments, or units in a collective scheme to comply with the Securities and Futures Act (SFA).
The various banks’ responsibility to ensure that they establish suitable procedures and controls have also been equally clear. They are expected to ensure that all transactions governing customer transactions and relationships comply with customer due diligence requirements.
Possible reasons for closures
Among the multitude of reasons that could contribute towards this phenomenon, there are two that stand out as plausible explanations.
The first stems from the possibility that the cryptocurrency businesses associated with the alleged closures were in some way linked or suspected of being linked to money laundering efforts. This is a very real concern for authorities on a global scale due to the ambiguous nature of the industry that is somewhat shrouded in undefined parameters.
The second concern could be the grave possibility of crypto-funds being used to fund terrorism causes. Blockchain technology has long been feared to have the potential to increase the opaqueness, transactional velocity as well as overall efficiencies of terrorist attacks. Prevention is definitely better than damage control when it comes to this matter.
Closure will actually help all involved
Aside from the fact that the companies involved in bank account closures are feeling the ramifications first hand, a strong stand on the issue is necessary for Singapore to maintain its stability.
Granted, over-regulation may create fears of dampening the country’s position as a major financial hub. However, regulators also have the duty to preserve the integrity of the financial industry. With more virtual currencies carrying out Initial Coin Offerings, a well regulated environment will serve to build confidence on both the investor and the business sides.
Whatever reason there might be for the closures taking place, one pertinent viewpoint is that it is commendable that our local banks are taking pre-emptive measures to streamline the regulatory process. All those involved in the industry do have their part to play in facilitating a safe, conducive as well as reliable business environment – whatever that business may be.