SINGAPORE (Nov 1): A cryptocurrency exchange that halted Singapore activities two years ago is resuming services there after two local banks opened accounts for the firm, a sign that the country’s lenders are warming to the industry.
Luno, which moved headquarters to London in 2017, will restart digital wallet and trading services using Singapore dollars within a month, Asia head Vijay Ayyar and country manager Sherry Goh said. The two corporate bank accounts allow the firm to pay salaries and hold money raised from investors, they said in an interview this week, while declining to name the banks.
Founded as BitX in Singapore in 2013, Luno was among several crypto firms whose bank accounts were shuttered in the Southeast Asian nation in recent years because domestic lenders were concerned about potential illicit flows and other criminal activities.
The U.K. Financial Conduct Authority in 2016 accepted the company into its regulatory sandbox, allowing the firm to test its crypto-based remittance service using British pounds. Luno has since been expanding in Europe and Africa.
“Singapore remains strategic and crucial to our operations,” said Ayyar.
Still, Luno’s existing Singapore bank accounts don’t allow it to hold money for clients, the biggest impediment for a crypto-exchange operator to thrive, said Goh, who joined the firm in 2018 after almost eight years at the Monetary Authority of Singapore.
“It’s a good start, but there’s more work to be done,” she said. “The bank situation shall be resolved soon, because that is core and fundamental to getting crypto exchanges and their business up and running.”
Luno currently relies on a store-value facility to handle its clients’ money in the absence of banking services for such a purpose, Ayyar and Goh said.
Banks’ Snub
Banks have shunned firms handling cryptocurrencies, given that the anonymity behind transactions can lead to usage by criminals, especially when moving money across borders.
Companies handling cryptocurrencies in the island nation are trying to convince banks and regulators that they are reliable. The Association of Cryptocurrency Enterprises and Startups Singapore has led an initiative to promote a code of practice within the industry, involving consultation with the MAS and banks. Luno is a part of the industry group.
From next year, entities that buy or sell cryptocurrencies or operate an exchange for such products will be regulated under new legislation known as the Payment Services Act. Luno said it welcomes the move, which helps mitigate risks rather than banning the use of cryptocurrencies entirely.
Luno facilitates trading of Bitcoin, Bitcoin Cash and Ethereum, and plans to add two more tokens on its platform. The company, which has raised US$13 million ($17.7 million), is looking to expand in Australia and the Philippines.
