The Virtual Currency Industry is to be Regulated in Singapore

On 13th March 2014, Singapore's Central Bank announced its plans to begin regulating virtual currency intermediaries such as bitcoin exchanges and vending machines. This move was made in order to address concerns regarding the possible use of virtual currencies for illicit transactions. Singapore follows USA as only the second country to discuss regulations.

  • Under proposals from the Monetary Authority of Singapore (MAS), intermediaries will have to verify the identity of their customers and report any suspicious transactions to the authorities.
  • Virtual currency pose concerns for regulators because people can make transactions with them anonymously and there are no restrictions on trading across borders.
  • This fuelled concerns that they could be used for money laundering or financing terrorism.
  • Last year criminal authorities in the U.S. indicted the operators of digital currency exchange Liberty Reserve and accused the company of helping criminals launder over $6 Bn in funds.
  • It was linked to everything from child pornography to software used for bank hacking.
  • In October 2013, authorities there also shut down an online marketplace called Silk Road that was used for purchasing drugs and hiring Assassins!

'Consumers and businesses should take note of the broader risks that dealing in virtual currencies entails and should exercise the necessary caution,' said MAS deputy managing director Ong Chong Tee.

The initiative comes not long after a top Bitcoin exchange in Tokyo, Mt Gox, filed for bankruptcy protection last month. The first bitcoin vending machine, designed by local startup Tembusu Terminals, started business on February 27th. Singapore currently has at least two Bitcoin exchanges and around half a dozen Bitcoin 'ATMs'.