SINGAPORE (BLOOMBERG) – Binance Asia Services, which recently withdrew an application to offer cryptocurrency services in Singapore, did not meet the central bank’s criteria for safeguarding against money laundering and terrorism financing, a person with knowledge of the matter said.
The Monetary Authority of Singapore (MAS) allows applicants to withdraw rather than face an outright regulatory rejection, the person said, asking not to be identified because the deliberations are confidential.
No reason was given when Binance Asia, an affiliate of the world’s largest cryptocurrency exchange, said Dec 13 it was pulling the application. MAS managing director Ravi Menon said in October that it would apply “very high standards” in issuing the coveted crypto licences.
Of the roughly 100 firms that have dropped out of the running so far, most did so after failing to meet Singapore’s strict criteria on countering potential illicit flows, according to the person. In all, some 170 companies applied last year for crypto permits in the Asian financial hub after legislation regulating the payments industry became effective in January 2020.
Binance spokesperson Hazel Watts, in response to a request for comment, said the exchange’s decision to withdraw its license application was made “for strategic and commercial objectives only.
“Binance recently made a sizeable investment into the regulated exchange HGX, which rendered our application for Binance Asia Services redundant.”
Binance Asia Services has taken a robust approach to security, including risk-sensitive application of measures to combat money laundering and terrorism financing, as well as mandatory “know-your-customer” protocols and continued collaboration with the Singapore Police Force’s Anti-Scam Centre to combat ransomware, hacks and scams, Ms Watts added.
Binance Asia took into account “strategic, commercial and developmental considerations globally” in its decision to withdraw the Singapore application, the company said when announcing the move. It will wind down operations at the fiat-to-cryptocurrency trading platform Binance.sg by Feb 13.
The central bank looks at applicants’ understanding of risks related to money laundering and terrorism financing when deciding on approvals, MAS chairman Tharman Shanmugaratnam said in a reply to Parliament in July. It also considers “technology risks posed by their business model, as well as the adequacy of controls instituted to mitigate such risks”, he said at the time.
“MAS’ approach to regulation under the Payment Services Act seeks to facilitate innovation while ensuring that adequate controls are in place to address key risks such as money laundering and terrorism financing,” a MAS spokesperson said in response to questions from Bloomberg, without addressing Binance Asia’s application.
“Applicants are able to withdraw their applications should they see fit, upon which those who are operating under exemption will be required to cease providing regulated payment services,” the MAS spokesperson said.
Fewer than 70 companies are still waiting for regulatory approval to officially operate cryptocurrency-related services in Singapore. Four firms are known to be approved so far, including DBS Group Holdings’ brokerage unit and Independent Reserve.
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