Singapore has cemented its status as Asia’s leading cryptocurrency fintech hub in its recent move to license digital payments services providers.
As other Asian cities like Hong Kong remain staunch on cryptocurrency-related legislations, Singapore’s welcoming stance hopes to lure digital asset groups. The Monetary Authority of Singapore (MAS) has been an active promoter of fintech businesses, in a bid to attract investments and entrepreneurs in contributing to the country’s development.
Singapore’s road to regulating cryptocurrency has been a cautious and interesting journey so far. In this article, we take a look at the key crypto developments in Singapore over the years.
Local cryptocurrency exchange, FYB-SG was founded in January 2013 and offered bitcoin trading for fiat currency, more specifically in Singapore dollars.
Later that year, investigations arose involving online currency transfer service Liberty Reserve, which drew Singapore into a high-profile criminal case.
Liberty Reserve allegedly facilitated a Dominican Republic gang member in depositing thousands of dollars of stolen cash into two of the company’s accounts through currency centres based in Russia and Singapore. This was one of the first cases to prompt the authorities to regulate the virtual currency industry.
In September 2013, MAS cautioned consumers against bitcoin trading although some merchants in Singapore have started accepting crypto payments for physical goods.
Tembusu Terminals launched Asia’s first Bitcoin ATM at a small pub in Boat Quay in February 2014.
The following month, Singapore was reportedly set to become the second country in the world after the US to regulate digital currencies such as bitcoin.
MAS issued a proposal for customer identities to be verified in any virtual currency exchanges, and urged suspicious transactions to be reported. This regulation was imposed to address potential risks of money laundering or terrorism financing.
That same year, Singapore-based crypto exchange platform Coinhako was launched. Its digital platform enables consumers to buy, sell, and secure Bitcoin and other digital assets.
Coinhako is also one of Asia’s first digital asset wallet services and now stores more than 100,000 user wallets.
In 2015, there were 63 cryptocurrency-linked firms in Singapore. That same year, Singapore-based payment processing gateway that offers credit card processing and Internet banking transfers, Xfers, was launched.
Homegrown crypto startup responsible for Asia’s first bitcoin ATM, Tembusu, also raised S$1.2 million for cryptocurrency development in January 2015. This fresh capital injection valued the company at S$11 million.
Coinbase, one of the world’s largest U.S.-based bitcoin companies, launched retail buy and sell operations in Singapore and Canada in September 2015, as part of its push to expand usage of the digital currency globally. Singapore was the company’s first foray into Asia.
TenX was also founded in 2015 during a hackathon in Singapore; it is a payments platform that allows users to make daily transactions with cryptocurrency.
Bank of Canada and MAS embarked on Project Jasper and Project Ubin in 2016.
Under Project Ubin, MAS partnered with blockchain technology companies and financial institutions to make interbank payments using blockchain technology.
Singapore-founded Digix, a gold-tracking asset on the Ethereum blockchain, raised its crowdsale goal of US$5.5 million in under 12 hours in April 2016.
Unfortunately, two Bitcoin ATMs in Tiong Bahru Plaza and Hong Lim Complex crashed as the price of cryptocurrency skyrocketed past US$16,000 in December 2017. Bitcoin wallet services provider Coinhako was one of the few crypto-related companies who experienced bank account closure by local banks.
In June 2017, Singapore-based cryptocurrency startup TenX raised US$80 million for its ICO, in which it raised US$43 million in just seven minutes.
Singapore’s first legal dispute involving cryptocurrency bitcoin headed for trial on 5 December 2017. Electronic market maker, B2C2, sought to recover 3,084.78582325 bitcoins from Singapore-incorporated bitcoin exchange operator, Quoine.
In December 2017, cryptocurrency mining company Ducatus Global opened Singapore’s first cashless cafe at Oxley Tower on Robinson Road. It only accepts cashless payments, including cryptocurrencies like Bitcoin and Ducatus coins. It also has an in-store cryptocurrency ATM.
On 17 December 2017, Bitcoin reached an all-time high of US$19,783.06, compared to January 2017, when a single Bitcoin was worth slightly under US$1,000.
Following this spike, MAS issued a media release cautioning the public against cryptocurrency investments on 20 December 2017. Just a couple days after, on 22 December 2017, Bitcoin dipped by 45 per cent to US$11,000.
Singapore-based decentralised storage network company, Bluzelle, raised almost US$20 million with its 24-hour campaign in February 2018.
Parliamentary questions were raised in 2018 regarding banning cryptocurrency trading. MAS replied favoruably to crypto traders, adding that the risks of money laundering and terrorist financing risks will be monitored closely.
Furthermore, MAS reaffirmed the economic and social benefits of encouraging experiments in the blockchain space, especially regarding cryptocurrencies.
MAS then issued a warning in 2018 to eight digital token exchanges in Singapore not to facilitate trading in digital tokens that are securities or futures contracts without authorisation. It also warned an Initial Coin Offering (ICO) issuer to stop offering its digital tokens to local investors in Singapore.
By November 2018, the value of Bitcoin was reported to have fallen to around US$5,500.
Funan’s Kopitiam outlet started accepting digital currency payments including bitcoin, ethereum and creatanium in 2019.
Binance, now one of the world’s largest crypto exchange platforms, launched in Singapore in April 2019.
MAS issued a consultation paper on 20 November 2019, proposing to allow payment token derivatives to be traded on Approved Exchanged and to regulate the activity under the Securities and Futures Act.
Torque, an investment platform that seems to use a multi-level marketing scheme, was also incorporated in 2019 by Singaporean Bernard Ong, in the British Virgin Islands.
TenX announced an indefinite shut down and discontinuation of its services in January 2020.
MAS launched the Payments Services Act (PSA) Singapore. The Payment Services Act is a framework for the regulation of payment systems and payment service providers in Singapore. It ensures regulatory certainty and consumer safeguards, while encouraging innovation and growth of payment services and Fintech.
For instance, Xfers was awarded the Major Payment Institution (MPI) license on 28 January 2020 by MAS. Later in October, the company launched XSGD in October 2020, the world’s first Travel Rule compliant stablecoin backed 1:1 with the Singapore dollar.
MAS and Temasek also announced on 13 July 2020 the successful conclusion of the final phase of Project Ubin.
DBS announced on 10 December 2020 that it will set up a members-only digital exchange (DDEx) for cryptocurrencies for institutions and wealthy clients to tap into asset tokenisation.
Gemini started supporting the Singapore dollar in buying crypto and trading in 22 December 2020.
February 2021 saw the collapse of Singapore-based cryptocurrency trading platform, Torque, and the suspension of all its trading activities. Up to 155 police reports were lodged against Torque by April 2021, with investors claiming losses in the millions in cryptocurrencies.
Singapore was also reported to be Asia’s digital securities trading hub in March 2021.
On top of cross-border money transfer service, Adyen Singapore’s license as a Major Payment Institution under the PSA was expanded to include merchant acquisition and domestic money transfer services. Furthermore, Adyen Singapore was the first global payments provider to be licensed for merchant acquisition service under the PSA.
The State of Crypto in Singapore Report 2021, conducted in July 2021 by crypto exchange Gemini found that Ether is Singapore’s most owned cryptocurrency, followed by Bitcoin, Cardano, and Binance coin. The report found that 34 per cent of non-crypto holders were likely to start investing in crypto over the next year.
To solidify Singapore’s status as a cryptocurrency and blockchain hub, MAS gave out the first PSA licenses in August 2021. For example, Independent Reserve, an Australia-founded crypto exchange, was granted an “in-principle approval” from MAS under the Payment Services Act on 3 Aug 2021.
DBS Vickers, the brokerage arm of DBS Bank, announced on 12 August 2021 that it received an in-principle approval from MAS to offer crypto trading services for digital payment tokens. DDEx reportedly recorded almost S$180 million in total trading value in 2021.
What lies ahead for crypto in Singapore?
The future of crypto in Singapore is looking bright. Singapore’s growth as a regional hub is spurring new initiatives in nearby countries, such as in Thailand and Japan.
However, new challenges are sure to emerge, like security issues and the pricing of underlying assets. Users might still have reservations with trading in the digital space as cybersecurity issues persist. Liquidity and transparency in pricing of digital assets still have a lot of room for improvement, and there is optimism as the market grows to accomodate more liquidity.
At the same time, the question of how the growth of digital exchanges could possibly threaten or complement more traditional currency exchanges still remains.
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