Cryptocurrency and blockchain firms have grown explosively in both Singapore and Switzerland. The two finance rivals are racing neck-to-neck to lure top firms to settle in.
Singapore's cryptocurrency and blockchain lobby, ACCESS, is currently working with the Monetary Authority of Singapore on a framework for cryptocurrency companies to open and maintain bank accounts in Singapore.
«We are working with MAS, alongside other banks to draft the code of practice amongst the banks to let blockchain-based and cryptocurrency firms have sustainable bank accounts,» said Anson Zeall, chairman of ACCESS told finews.asia.
Switzerland's First Move
The revelation by Zeall sheds light on Singapore's eagerness to close the gap with Switzerland, which recently announced a major alliance between cryptocurrency firms and banks. Just one and a half weeks ago, the Swiss Bankers Association, an industry lobby, published guidelines for opening corporate accounts for blockchain based firms, in what observers say is a surprising alliance between old finance and new finance.
The guidelines were published with the support of the Crypto Valley Association, which was founded in January 2017. «Business accounts are an important infrastructure service. Banks have an interest in doing business in this growth area,» the banking lobby group wrote in its media statement.
«At the same time, it should be emphasised that the applicable due diligence obligations are binding and that there is no right to open an account.»
More Requirements If Raising Capital
Firms doing initial coin offerings, or ICOs, should be filtered between those raising fiat currencies and those taking in cryptocurrencies, the group recommended. Documentation for the latter is more comprehensive.
«The guideline recommends that the ICO organizer apply the relevant Swiss standards on resource origin (KYC) and money laundering when accepting cryptocurrencies under an ICO. It is also proposed that the acceptance of cryptocurrencies under ICOs should in principle be treated as at least one spot transaction,» SBA wrote in its media statement.
Banks Wary of Risks
Cryptocurrency firms or companies issuing coins face hurdles in accessing bank accounts as they pose risks for banks. While Singapore's banks may have opened accounts for cryptocurrency firms previously, these were later closed. At least 10 companies that provide cryptocurrency payment and trading services have encountered bank account closures in Singapore, according to a report in «Business Times» (behind paywall).
The blanket denial of banking services to cryptocurrency firms could be a hurdle for Singapore's aspirations to become a fintech hub, noted Nizam Ismail, head of financial services at RHTLaw Taylor Wessing.
«It is important to appreciate the fundamental difference between banks taking a risk-based approach (identifying, measuring and assessing the risk profile of a particular client), and de-risking (a blunt and blunderbuss approach of shutting out certain industry players),» he wrote in a «LinkedIn» post.
Switzerland Leads For Now
Last week, a crypto bank called Seba Crypto was poised to launch, as reported by finews.com. The firm is applying for a banking license from Swiss regulator Finma – a first for Switzerland's financial center. The project has already clinched 100 million Swiss francs ($103.5 million) from private and institutional investors in the past three months.
Although Switzerland appears to be one-step ahead of Singapore in this area, Singapore-based firms dealing with cryptocurrencies could catch up very soon. According to a 2018 June report by PWC, Singapore has maintained third place in 2018 for initial coin offerings (ICOs) in terms of funding volume from 2017, while Switzerland went from second position to sixth.
Singapore Can Execute Fast
«Singapore is now the 3rd largest ICO fund raising country in the world. In Singapore, once everything (including regulations) are in place, plans can be executed very fast and well,» Zeall observes.
Plus, ACCESS has on-boarded notable auditing firms. «Besides having the code of practice, code of conduct, and and anti-money laundering processes, we now have EY and Deloitte on board to audit cryptocurrency firms,» said Zeall.
Not For Everyone
Some firms, like Jaax – an e-wallet – may not need a bank account, noted Zeall. For them, they may just need to follow the standardization of practices in crypto currencies.
Under Switzerland's new guideline, companies that do not need to raise capital with an ICO should be treated like a regular small- or mid-sized enterprise, and not have to follow special guidelines.
Growth Surged in 2017
When it started back in 2014, ACCESS had only ten members. Today, it has about 290. «We saw exponential growth in membership from 2017. Collectively, the members have raised $600 million in the last few years,» said Zeall.
In a similar trend, Switzerland's Crypto Valley Association's membership surged in 2017. Four of the ten largest ICOs in 2017 were conducted in Switzerland, according to an report in «Forbes», citing figures from CoinSchedule.
