Singapore cryptocoin firm banks with Japan

by BLOOMBERG

SINGAPOREQuoine Pte Ltd, a cryptocoin exchange operator founded in Singapore, said it’s now routing customers’ payments to Japan, where the firm banks with lenders including Mitsubishi UFJ Financial Group Inc (MUFG) after an account in the city-state was closed.

A local branch of CIMB Group Holdings Bhd gave the company three weeks’ notice before terminating its account at the end of September, Quoine CEO Mike Kayamori said. Customers now have to wire their payments to accounts at the firm in Japan, he said in an interview last week.

Quoine joins about 10 firms specialising in cryptocurrency and payments services whose bank accounts have been shut in Singapore, where the financial regulator oversees only some activities related to the industry. Japanese authorities are taking a more active stance, granting licences to 11 exchange operators in September, including Quoine.

“Japan is on the forefront of cryptocurrency and fintech innovations, and banks are following the Financial Services Agency (FSA),” Kayamori said. “So from that we address all of our global customers from Japan.”

Quoine also has accounts with other Japanese banks including Sumitomo Mitsui Financial Group Inc, he said. Tokyo-based MUFG and Sumitomo Mitsui are Japan’s biggest lenders by market value.

Japan’s FSA introduced its cryptocurrency exchange registration system this year to ensure operators meet risk management standards, manage funds appropriately and check identities to prevent money laundering and terrorism financing. Kayamori said the regulator is keen to avoid a repeat of the 2014 collapse of Tokyo-based Mt Gox, which once was the world’s largest bitcoin exchange.

The Monetary Authority of Singapore doesn’t regulate cryptocurrency directly, although it requires intermediaries such as exchange operators to comply with rules to combat money laundering and terrorism funding.

Quoine’s account closure in Singapore is part of a “bank-wide issue” that’s not only confined to Kuala Lumpur-based CIMB and local lenders, Kayamori said. The firm still has another account for operations in Singapore, he said, declining to disclose the bank’s name. Quoine handled US$6 billion (RM24.84 billion) of transactions in October.

Banks in Singapore “have a zero-tolerance policy towards cryptocurrency and blockchain companies,” Kayamori said. “Banks say no now because it’s kind of in between, it’s a gray area.”

Still, Singapore has shown recent signs of opening up to the industry. The MAS said Nov 14 it intends to regulate trading of virtual coins to fiat currencies under a new payments framework. It’s also open to the idea of trialing some initial coin offerings in a regulatory sandbox, chief fintech officer Sopnendu Mohanty said last week. — Bloomberg