Singapore banks have closed accounts of several companies which specialize in providing cryptocurrency and payments services, according to two local bodies which represent financial-technology firms.
Noting that cryptocurrency firms have had similar problems with their banks in other countries, the head of Singapore’s Cryptocurrency and Blockchain Industry Association, or Access, asked the government to step in.
“From our analysis, it appears to be common among leading FinTech hubs,” Access Chairman Anson Zeall said in an emailed statement. “If this is the case, we would urge Singapore to take a leadership role and demonstrate how to come to an effective resolution among all parties.”
Zeall said his organization had heard from 10 companies which had encountered problems with their banking relationships in Singapore. The banks didn’t give a reason for their action, Zeall added.
The complaints illustrate some of the difficulties faced by cryptocurrency firms at a time when the sector is under growing scrutiny around the world. China has said it will halt exchange trading of cryptocurrencies by the end of September. JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon recently described the cryptocurrency bitcoin as a fraud and said he would fire any employee trading it for being “stupid.”
The Monetary Authority of Singapore, the country’s central bank, said in a statement that it doesn’t interfere with commercial decisions taken by banks “including those in relation to the establishment and termination of business relationships.” Banks are expected to establish suitable procedures and controls, including those governing customer transactions and relationships, and to comply with customer due diligence requirements of MAS rules on preventing money laundering and the financing of terrorism, the statement added.
Chia Hock Lai, president of the Singapore Fintech Association, which has broader membership than Access, said some of his organization’s members also experienced account closures, though he didn’t provide figures.
Neither organization named the banks which had closed their member firms’ accounts, but Access said the action had been taken by a “range of financial institutions.” Access has 106 members and the Fintech Association has 185, though the two organizations said some companies belong to both groups.
One local cryptocurrency-related firm, CoinHako, said its bank accounts had been closed by DBS Group Holdings Ltd., Southeast Asia’s largest bank, which didn’t provide any reasons. CoinHako, which provides cryptocurrency and digital assets wallet services, said it would be no longer able to process deposits and withdrawals in Singapore dollars.
“The closure of our bank account might be due to matters pertaining to” anti-money laundering rules and know-your-customer requirements, co-founder Yusho Liu said. That’s “why we go the extra mile to meet compliance standards set by” the MAS, he said.
“Even though we don’t fit anywhere in the current regulatory framework, CoinHako is fully committed to working towards a common consensus with the banks to allow for a more conducive environment going forward,” Liu said.
DBS declined to comment on CoinHako, citing banking secrecy, though it said any decision to close a customer’s account could be due to multiple factors. Those include “failure to maintain the account in good standing, failure to provide timely and accurate information, unexplained inconsistencies in account behavior, or unacceptable risk of criminal or terrorist behavior,” DBS said in an emailed response to questions.
“We remain open to exploring banking relationships with companies working with cryptocurrencies,” DBS added.
Koh Ching Ching, a spokeswoman for Oversea-Chinese Banking Corp., said the bank reviews customer accounts for risk management purposes “and may close these accounts for various reasons.” United Overseas Bank Ltd., the third of the large Singapore banks, declined to comment.
The MAS has said it will regulate the offer or issue of digital tokens if they constitute products regulated under the Securities and Futures Act. It doesn’t regulate virtual currencies per se, a similar position to that taken by central banks and regulators in other countries.
The MAS has also taken a leading role in efforts to promote Singapore as a regional center for financial technology, and is one of the organizers of a ‘fintech festival’ due to take place in November. Last year’s event drew more than 10,000 attendees. The MAS has also been working on a distributed ledger project and on the creation of a central bank digital currency, to be used for cross-border payments.
In its statement, the MAS said it “remains committed to developing Singapore as a reputable financial center and fintech hub.” That requires “pairing a progressive and nurturing environment for fintechs together with strong controls to mitigate risks such as fraud and money laundering.”
“We must be mindful that new technological developments and products bring with them new areas of risks, which the financial industry and regulatory authorities should pay heed to.”