Virtual currency transactions, given their anonymous nature, are particularly vulnerable to ML/TF risks, says the Authority.

To address this, MAS is to draw up new rules requiring intermediaries that buy, sell or facilitate the exchange of virtual currencies for real currencies to verify the identities of their customers and report suspicious transactions. The requirements will be similar to those imposed on money changers and remittance businesses who undertake cash transactions.

Deputy managing director of MAS, Ong Chong Tee, says: "MAS is taking a targeted regulatory approach to virtual currencies to specifically address money laundering and terrorist financing risks. Consumers and businesses should take note of the broader risks that dealing in virtual currencies entails and should exercise the necessary caution."

He says that the new rules will not extend to the safety and soundness of virtual currency intermediaries nor the proper functioning of virtual currency transactions, pointing out that investors will not have the safeguards enjoyed by equity market participants under the Securities and Futures Act and the Financial Advisers Act.

Singapore has been rapidly re-writing its rule books to take account of the rising popularity of crypto-currencies. Earlier this year, the Inland Revenue of Singpore issued clear guidance to users on how to handle taxation issues arising from bitcoin transactions.

In the UK, meanwhile, the Bank of England, believes that current levels of economic activity and payments involving bitcoin are too light to have a material impact on the bank's monetary or financial stability objectives in the short term.

In its latest quarterly bulletin, the central bank opines that the popularity of digital currencies largely derives from their ability to serve as an asset class. "As such they may have more conceptual similarities to commodities, such as gold, than money," says the bank.