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Singapore to set up rules on virtual currencies
Publication Date : 14-03-2014
Singapore will become one of the first countries in the world to set up rules on vendors and exchanges involving virtual currencies like bitcoin.
The Monetary Authority of Singapore (MAS) said yesterday that operators of bitcoin exchanges and currency-conversion vending machines will have to verify customer identities and report suspicious transactions.
These requirements are similar to those imposed on money changers and remittance businesses that undertake cash transactions.
Shops that accept bitcoins for goods and services will not be subject to the regulations for now.
The rising popularity of digital currencies has been a source of concern for financial regulators worldwide. MAS is introducing the regulations on intermediaries as the anonymous nature of virtual currencies makes them "particularly vulnerable to money-laundering and terrorist financing risks".
But it is not regulating virtual currencies as such or their soundness, as they are not considered as securities or legal tender.
A public consultation will be held before the proposed regulations are brought in.
Singapore is the second nation to come up with rules for intermediaries of virtual currencies. The United States has requirements like registering with authorities and keeping transaction records.
The new rules follow the collapse of Japanese exchange operator Mt. Gox last month after losing bitcoins worth more than US$500 million.
Last year, US authorities also busted online platforms Liberty Reserve and Silk Road for allegedly allowing virtual currency to be used for crimes like drug-dealing.
The rules also come amid a proliferation of machines for exchanging real and digital currencies.
Industry players, who say there are about eight bitcoin exchanges and vending machine operators here, generally welcomed the rules, but had some concerns.
Jarrod Luo, co-founder of vending machine operator Tembusu Terminals, which has a machine at Boat Quay, said: "Such clarity on the regulations can only be good for doing business."
But he expects to incur costs to upgrade the machine. Tembusu also plans to install seven to 10 machines over the next month.
Singapore's first machine that can accept bitcoin and return cash will open at Bartini Kitchen in Boon Tat Street on Monday. Coin Republic founder David Moskowitz, who is setting it up with Bitcoiniacs, said: "We've done a good job of self-regulating. We've had no problems of money-laundering or any of that nonsense."
Numoni chief executive Norma Sit, whose firm has four bitcoin vending machines here, added: "If the regulation is as tight as that under the Money-Changing and Remittance Business Act, then the cost... involved would eliminate the business case for vending virtual currencies."