By David Drake
Note: David Drake is on the advisory board for most of the firms mentioned or quoted in this article.
Singapore is among the top countries that have a vibrant cryptocurrency industry, coming third after the US and Japan. In a bid to boost cryptocurrency industry growth, the country’s financial regulator, the Monetary Authority of Singapore (MAS) made public its plans to help cryptocurrency firms operating within its borders to open bank accounts locally.
Previously, the absence of appropriate regulations has made it difficult for crypto-related businesses to run bank accounts in the country. Even so, this decision by the MAS does not in any way imply that the regulator is relaxing the regulatory environment so as to attract new cryptocurrency firms to Singaporean market.
The Singaporean government has been keen to boost its economic performance for purposes of creating more jobs. The move by MAS seems to be a strategy to boost financial sector performance and spur economic growth. It is expected that the cryptocurrency market will continue its growth spurt as technology advances. With more cryptocurrency firms opening bank accounts, the country will be in need of more applications and digital asset managers to facilitate and accommodate cryptocurrency transfers.
The emergence of new blockchain applications coupled with the opportunity to open bank accounts with enable cryptocurrency firms to establish relationships with financial companies and improve confidence with global companies.
Cryptocurrency firms that open bank accounts will be able to facilitate payments in digital currencies. At the same time, blockchain based projects will facilitate secure exchange of global currencies at fast speeds through bank accounts. As a major cryptocurrency player, these changes will be significant in providing a dependable environment and infrastructure for initial coin offerings in Singapore in terms by facilitating their access to startup capital.
ONe Network founder and CEO John Hoelzer says, “Singapore is already a hub to some degree for startups in the crypto sector. Having the official regulator assist these companies in establishing bank accounts is crucial to their future success.”
Challenge for banks
The cryptocurrency sector is largely unregulated in many countries. This means that local banks in Singapore will have to take caution when dealing with cryptocurrency firms. This is due to unclear regulations that make the industry risky for both banks and investors.
Acknowledging the need for clear regulations, Hoelzer adds that, “At the same time, proper regulation will be important as the banking sector in many areas of the world still seeks to take advantage of and discriminate against the current crypto companies. It is crucial for this to change and proper bridges need to be built in order to allow the country to maintain its status as a hub for these startups.”
Globally, banks and creditors prefer not to serve crypto companies because virtual currencies are associated with illegal activities such as laundering money. It will be interesting to see how financial institutions engage with crypto companies.