MAS takes first step towards rules regarding virtual currencies

A pile of Bitcoin slugs sitting in a box ready to be minted on April 26, 2013 in Sandy, Utah. Authorities in Singapore are taking the first step in setting up rules regarding virtual currencies such as bitcoins. -- FILE PHOTO: AFP
A pile of Bitcoin slugs sitting in a box ready to be minted on April 26, 2013 in Sandy, Utah. Authorities in Singapore are taking the first step in setting up rules regarding virtual currencies such as bitcoins. -- FILE PHOTO: AFP

Authorities in Singapore are taking the first step in setting up rules regarding virtual currencies such as bitcoins.

The Monetary Authority of Singapore (MAS) said on Thursday that it will regulate intermediaries of such virtual currencies in a bid to weed out illicit activities.

This means operators of bitcoins exchanges and ATMs will come under the financial regulator's ambit.

They will be required to verify the identities of their customers and to report suspicious activities to the Suspicious Transaction Reporting Office, requirements that are similar to those imposed on money changers and remittance businesses.

The move is a preemptive one "to address potential money laundering and terrorist financing risks", said the MAS in a statement.

For now, only intermediaries or those who buy, sell or facilitate the exchange of virtual currencies into real ones, and vice-versa, would have to comply with the new rules.

Merchants or shops that accept bitcoins in return for their goods and services will not be subject to the regulations as yet.

MAS "will continue to monitor closely the development and implications of virtual currencies as well as evolving regulatory approaches taken towards virtual currencies by major jurisdictions", the regulator said.

"If necessary, MAS will consider additional measures to address the risks posed by virtual currencies and their intermediaries."

MAS said it does not regulate virtual currencies as these are not considered as securities or legal tender.

The rules will not kick in immediately as a public consultation will be held before legislative changes are proposed in parliament. The whole process is expected to take about 12 months.

Singapore is the second country in the world to come up with regulations for intermediaries of virtual currencies, after the United States.

MAS on Thursday again warned of the risks of virtual currencies, saying their values can fluctuate greatly within a short period of time and cause huge losses to consumers and businesses.

It added that virtual currencies may not be issued by any identifiable organisation, so consumers and businesses may not be able to obtain a refund if the virtual currency schemes or intermediaries go missing.