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Singapore To Regulate Virtual Currency Traders

by Mary Swire, Lowtax.net, Hong Kong
18 March, 2014

The Monetary Authority of Singapore (MAS) announced on March 13, 2014, that it will regulate domestic virtual currency intermediaries to address potential money laundering and terrorism financing risks.

Given their anonymous nature, the MAS considers virtual currency transactions to be particularly vulnerable to money laundering and terrorism financing risks. To address this, MAS will introduce regulations to require virtual currency intermediaries, including Bitcoin exchange operators, that buy, sell, or facilitate the exchange of virtual currencies for real currencies, to verify the identities of their customers and report suspicious transactions. The requirements will be similar to those imposed on money changers and remittance businesses who undertake cash transactions.

Singapore, like most jurisdictions, does not regulate virtual currencies per se, as these items are not considered to be securities or legal tender. The MAS's move will make Singapore one of the first countries in the world to regulate virtual currency intermediaries for money laundering and terrorism financing risks. The MAS has emphasized that its regulation are specific to the money laundering and terrorist financing risks they pose, and do not extend to the safety and soundness of virtual currency intermediaries or the proper functioning of virtual currency transactions.

"Investors in virtual currencies will not have the safeguards that investors in securities enjoy under the Securities and Futures Act and the Financial Advisers Act," the Authority said.

Deputy Managing Director of MAS, Ong Chong Tee, 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."

The Authority said that it will continue to monitor closely the development and implications of virtual currencies as well as evolving regulatory approaches taken towards virtual currencies by major jurisdictions. It added that, if necessary, it will consider additional measures to address the risks posed by virtual currencies and their intermediaries.


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