The Monetary Authority of Singapore (MAS) is to regulate virtual currency intermediaries in order to address potential money laundering and terrorist financing risks.
A statement from MAS said the anonymous nature of virtual currency transactions leave them particularly vulnerable to these risks.
In response, MAS is introducing regulations requiring intermediaries that operate virtual currency exchanges and vending machines to verify the identities of their customers. They will also be required to report any suspicious transactions to the Suspicious Transaction Reporting Office.
Ong Chong Tee, deputy managing director of MAS, said:
“MAS is taking a targeted regulatory approach to virtual currencies to specifically address money laundering and terrorist financing risks. Consumers and businesses should take note of the broader risks that dealing in virtual currencies entails and should exercise the necessary caution.”
These new requirements are similar to those that already exist for money changers and remittance companies that facilitate cash transactions in the country.
Greater clarity
Antony Lewis, business development at Singapore-based bitcoin exchange itBit, said: “We welcome regulatory clarity for bitcoin, and we applaud these steps by the Monetary Authority of Singapore.”
He went on to say itBit focuses on offering bank-level security to those trading bitcoin, comcluding:
“As outfits which knowingly engage in questionable transactions are regulated out of the market, consumers win.”
The MAS statement highlights it does not view virtual currencies such as bitcoin as securities or legal tender and , as such, the intermediaries involved are not covered by the Securities and Futures Act and the Financial Advisers Act.
Last year, MAS warned consumers of the potential dangers of digital currencies, but followed this in December with a statement revealing it would not interfere with bitcoin adoption.
The authority said: “Whether or not businesses accept bitcoins in exchange for their goods and services is a commercial decision in which MAS does not intervene.”