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Singapore Central Bank and Police Assist Banks in Fine-Tuning Screening for Digital Asset Providers

Singapore’s central bank and police are reportedly working with banks to fine-tune their approach to opening accounts for digital asset service providers, according to Bloomberg. The project has been ongoing for about six months, and a report outlining best practices on due diligence and risk management is set to be released within the next two months.

The guidelines will apply to companies that provide payment, trading, and transfer services for assets such as stablecoins and non-fungible tokens (NFTs). The move comes as the crypto industry seeks to link up with traditional banks, but banks remain cautious about digital asset volatility and potential regulatory issues.

The official from the Monetary Authority of Singapore (MAS) said that whether a bank initiates or maintains a financial relationship with a cryptocurrency customer is a matter for the bank to decide between commercial considerations and business risk tolerance, even if guidelines are in place.

In recent times, US financial institutions such as Silvergate Capital and Signature Bank, which provided payment services to cryptocurrency companies, went bankrupt, leaving crypto firms struggling to find new banking partners.

The report’s release will give banks a better understanding of the best practices for conducting due diligence and risk management. It will also help them identify the risks associated with digital assets, particularly stablecoins and NFTs.

The MAS has been supportive of blockchain and crypto technology and has taken steps to establish Singapore as a hub for fintech innovation. The central bank’s ongoing work with local banks is expected to provide a more conducive environment for digital asset service providers, while at the same time helping to reduce the risks associated with these assets.

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