Singapore will regulate virtual-currency intermediaries including operators of Bitcoin exchanges
and vending machines to address potential money-laundering and
terrorist-financing risks.
The Monetary Authority of Singapore will require
intermediaries that facilitate the exchange of digital
currencies to verify identities of their customers and report
suspicious transactions to a unit of the city-state’s police, it
said in a statement today. No timeframe was given.
Digital currencies have come under scrutiny in markets from
China to Russia and the U.S., with some regulators calling for
bans or limits on their use. Charlie Shrem, the founder of
exchange company BitInstant, was charged in Manhattan two months
ago with conspiring to launder $1 million of Bitcoins.
“Consumers and businesses should take note of the broader
risks that dealing in virtual currencies entails and should
exercise the necessary caution,” MAS Deputy Managing Director
Ong Chong Tee said in today’s statement.
The new rules would make Singapore one of the first
countries to target the risk of money laundering and terrorism
financing among agents of virtual currencies, MAS said. In
December, China’s central bank barred financial institutions
from handling Bitcoin transactions following a surge in the
currency’s value.
Mt. Gox, a Japanese exchange operator, collapsed last month
following the loss of Bitcoins valued at more than $500 million.
The digital currency was introduced in 2008 by a programmer or
group of programmers under the name Satoshi Nakamoto and has
since gained traction with merchants around the world. Bitcoins
have no central issuing authority and use a public ledger to
verify transactions.
‘Global Leader’
Virtual currency intermediaries in Singapore will be
subject to the similar rules that govern money changers and
remittance businesses, MAS said in today’s statement.
The rules won’t cover the “safety and soundness” of the
intermediaries or the transactions, it said. The authority said
it will monitor regulations in other jurisdictions and consider
additional measures to address the risks posed by virtual
currencies and their intermediaries.
“This really sets Singapore out as the global leader of
virtual currency regulation,” said Antony Lewis, head of
business development at itBit Pte, a Singapore-based virtual
currencies exchange. “As less professional outfits engaged in
questionable activities are regulated out of the market,
consumers win.”
Bankruptcy Protection
Mt. Gox, once the world’s largest exchange for digital-currency transactions, went offline in Tokyo on Feb. 25 after
halting customers’ Bitcoin withdrawals. The exchange applied for
bankruptcy protection three days later, saying it had lost
750,000 Bitcoins belonging to customers and 100,000 of its own.
Bitcoin gained 1.4 percent to $640.36, the CoinDesk Bitcoin
Price Index showed as of 11:33 a.m. London time. The value has
almost halved from its December peak.
Japan’s government said March 7 that while Bitcoin isn’t a
currency, it could be subject to taxation like goods and
services. It issued the statement in response to questions from
opposition lawmaker Tsutomu Okubo, who has since asked the
administration to clarify how it will regulate Bitcoin.
A day before Mt. Gox filed for bankruptcy, Tembusu
Terminals Pte set up what may be Singapore’s first machine for
buying Bitcoins at a bar in the downtown Boat Quay district.
MAS doesn’t recognize Bitcoin as legal tender and had had
cautioned individuals about the use of virtual currencies,
Tharman Shanmugaratnam, the regulator’s chairman and Singapore’s
finance minister, said in Parliament on Feb. 21.
To contact the reporter on this story:
Sanat Vallikappen in Singapore at
vallikappen@bloomberg.net
To contact the editors responsible for this story:
Chitra Somayaji at
csomayaji@bloomberg.net
Darren Boey, Ben Scent
Singapore to Regulate Bitcoin Operators for Money Laundering
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