Out-Law News 2 min. read
13 Mar 2014, 3:43 pm
The new regulations will require virtual currency intermediaries which buy, sell or facilitate the exchange of virtual currencies – such as Bitcoin - for real currencies to verify the identities of their customers, said MAS. Virtual currency intermediaries would also be required to report suspicious transactions to Singapore's Suspicious Transaction Reporting Office.
The move makes Singapore only the second state in the world to introduce such regulations according to the BBC. And MAS has warned that it will bring in additional measures to protect against the broader risks of virtual currencies, should they feel it is necessary.
Virtual currencies, also known as digital currencies, are non-physical stores of value that can be exchanged for goods and services at places that accept them, according to the Singapore government's MoneySENSE website.
In a statement issued yesterday, MAS emphasized that the new regulations will focus only on the money laundering and terrorist financing issues surrounding the exchange of virtual currencies. They will not offer consumers and businesses protection from other risks which MAS, the central bank of Singapore, has warned surround virtual currencies.
"Virtual currency transactions, given their anonymous nature, are particularly vulnerable to money laundering / terrorist financing risks," said a MAS statement. "To address this, MAS will introduce regulations to require virtual currency intermediaries that buy, sell or facilitate the exchange of virtual currencies for real currencies to verify the identities of their customers and report suspicious transactions to the Suspicious Transaction Reporting Office."
Deputy managing director of MAS, Mr 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.”
MAS said that the requirements placed on virtual currency intermediaries under the moves will be similar to those which already apply to money changers and remittance businesses who undertake cash transactions.
Singapore tax authorities recently issued guidance on the income tax treatment of virtual currencies.
MAS has been warning consumers and businesses about what it describes as the "significant risks" associated with virtual currency transactions since June 2013. Its announcement on anti-money laundering and anti-terrorism measures repeated these warnings, emphasizing that the new regulations will not mean that users of virtual currencies will enjoy the safeguards that investors in securities enjoy under Singapore's Securities and Futures Act and the Financial Advisers Act.
MAS highlighted that, like many countries, Singapore does not regulate virtual currencies because it does not regard them as securities or legal tender. MAS warned consumers that the values of virtual currencies can fluctuate greatly within a short period of time, risking significant monetary losses for businesses and consumers. It further warned it may not be possible to identify the individual or organisation behind a virtual currency and that consumers might not be able to secure a refund of their moneys should virtual currencies or the intermediaries acting for them cease to operate.
The MAS statement said that the move will make Singapore one of the first countries in the world to regulate virtual currency intermediaries to combat money laundering and terrorism financing. "MAS 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. If necessary, MAS will consider additional measures to address the risks posed by virtual currencies and their intermediaries," the statement said.