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Is S’pore crypto-friendly? Here’s how MAS’ regulations could impact businesses and investors

bitcoin on singapore flag

A few months ago, a friend of mine decided he would finally invest in cryptocurrency.

That morning, he had read about the Shiba Inu token’s meteoric rise. The prospect of becoming an overnight millionaire drew him in, or anyone else for that matter. By midday, he had set up an account on Crypto.com, completed the Know Your Customer (KYC) checks, and bought 1.5 million Shiba Inu coins. 

Singapore is among a short list of countries where buying cryptocurrency is that simple.

As of today, there are nine countries which have banned crypto altogether, China being one of them. There are another 42 which have partial bans on how crypto can be used.

At the same time, there are just as many countries which are currently in limbo. For example, Russia and India are both considering regulations which don’t look too favourably on blockchain technology. 

Why is cryptocurrency being regulated? 

To put it simply, regulating cryptocurrency is a question of balance. It’s about weighing the promise of innovation against the risk of financial instability and crime.

With China leaning far right, Singapore has stood to gain a lot on the other end of the spectrum. Over the past few years, the country has emerged as a hub for crypto in Asia — this is largely thanks to the free reign which companies have enjoyed while experimenting in blockchain technology.   

It also helps that Singapore’s stance on cryptocurrency has remained generally consistent. Even through times of volatility and high speculation, the Monetary Authority of Singapore (MAS) has acknowledged the potential benefits of blockchain technology alongside the risks. 

bitcoin price chart 2017
Bitcoin soared from US$1,000 to just under US$20,000 in value in 2017 / Screenshot of CoinMarketCap

Take 2017 for example. Following Bitcoin’s unprecedented run throughout the year, China banned financial institutions from facilitating crypto transactions. Meanwhile, Egypt declared crypto, as a whole, an illegitimate currency.

Such decisions might’ve saved retail consumers from making risky investments, but they came at the expense of innovation. 

On the other hand, MAS only issued warnings — as it has continued to do in the years since. Retail investors were advised not to treat cryptocurrencies as investment assets due to the unpredictable swings in value. However, they weren’t prevented from investing if they still pleased.

Blockchain companies have enjoyed similar liberties while operating in Singapore; the freedom to continue operations while MAS deliberates on a way forward. Even today, these companies are allowed to operate under exemption while they seek a license under the Payment Services Act. 

Why did Singapore even introduce crypto licenses? 

Singapore hasn’t created new laws to govern cryptocurrency.

Rather, the MAS is regulating the space under existing Securities laws. This is because some digital tokens are now being used for the same purpose as traditional securities such as stocks and mutual funds. 

By grouping traditional and digital securities together, the MAS can maintain the benchmark standard of safety and protection which must be provided to retail investors.

As per this standard, crypto exchanges will be required to maintain a necessary amount of capital and have the necessary resources to safeguard assets. These clauses, among a list of others, can help prevent some of the scams which have emerged in the crypto space in recent times. 

Does this make Singapore less crypto-friendly? 

It depends on how you look at it. On one hand, these regulations make it tougher to set up a business which deals in digital securities.

A report from December 2021 revealed that applications from over 100 such businesses (out of 176) had either been withdrawn or rejected by the MAS.

Among these companies was Binance, the world’s largest cryptocurrency exchange in terms of daily trading volume. Binance’s withdrawal from Singapore spurred conversations about the country no longer being the crypto haven which it once was.

But that’s not necessarily true. It seems more that Singapore has become less friendly to crypto-related frauds and scams, not cryptocurrency itself. The Securities regulations are applied only where necessary. Exchanges that don’t intend to transact in digital securities are free to operate as they have been doing. 

To clarify, digital securities refer only to those crypto tokens which represent ownership in an underlying asset, or serve as a way of claiming debt.

Most popular cryptocurrencies such as Bitcoin and Ethereum don’t fall under this category. The MAS has been careful not to hinder the crypto space as a whole, in its quest to regulate a portion of it. 

crypto awareness in singapore
Over 90 per cent of survey respondents had heard of Bitcoin in 2021 / Image Credit: ft.com

From a retail investor’s perspective, Singapore remains as crypto-friendly as it has ever been. It’s incredibly easy to create a wallet, purchase coins, and access all that the blockchain has to offer.

Apps such as Crypto.com even offer their own debit cards which can be used for everyday purposes. Users can earn cashback in the form of cryptocurrency and instantly convert between crypto and fiat money. 

If anything, these new regulations might even inspire more people and businesses to start adopting crypto. With their concerns of investment safety alleviated, they’ll now be free to diversify their savings without worry.

Featured Image Credit: AZCoin News

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Vulcan Post aims to be the knowledge hub of Singapore and Malaysia.

© 2021 GRVTY Media Pte. Ltd.
(UEN 201431998C.)

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