The Monetary Authority of Singapore intends to regulate virtual currency intermediaries within its territory to mitigate money-laundering and terrorist-financing risks.

The
Monetary Authority of Singapore intends to regulate virtual currency
intermediaries in the jurisdiction to mitigate money-laundering and
terrorist-financing risks. Virtual currency transactions, given their
anonymous nature, are particularly vulnerable to these, so MAS is to
require virtual currency intermediaries – such as Mount Gox, the
exchange that mysteriously crashed last month – that buy, sell or
facilitate the exchange of virtual currencies for real currencies to
verify the identities of their customers and report suspicious
transactions to the Suspicious Transaction Reporting Office. The
requirements will be similar to those imposed on money-changers and
remittance businesses (known in the UK and US as money service
businesses or MSBs) that undertake cash transactions.

This
is the first time that Singapore, in common with most jurisdictions,
has done anything to regulate virtual currencies as such, as its laws
do not consider them as securities or legal tender. This round of
regulation is aimed at financial crime reporting only and does not
extend to the safety and soundness of virtual currency intermediaries
nor the smooth functioning of virtual currency transactions, most of
which take about ten minutes to complete. Investors in virtual
currencies will not have the safeguards that investors in securities
enjoy under the Securities and Futures Act and the Financial Advisors
Act.

The
MAS has been cautioning consumers and businesses of the significant
risks associated with virtual currency transactions since June, when
the currency first stepped into mainstream consciousness all over the
world.