In January 2020, the introduction of new regulations — via the Payment Services Act — bolstered Singapore’s claim to being a global crypto hub. Allowing crypto companies to be licensed was seen as a progressive move — a signal that the country saw the potential benefits of blockchain technology.
At the time, countries like the US and UK seemed to be clamping down on crypto trading, while Russia and China had banned it altogether. Singapore was primed to become one of the foremost destinations for blockchain companies to set up shop.
Two years on, the tide has been shifting. Countries in Europe and the Middle East are catching up from a regulatory perspective, and cultivating a landscape which looks to be more friendly for investors and companies alike.
Although the Monetary Authority of Singapore (MAS) hasn’t implemented any blanket bans on crypto trading, it has deemed such investments unsuitable for retail consumers. In January 2022, crypto companies were barred from advertising to Singapore’s general public.
Following the market crash in June, the MAS also revealed that it was considering the introduction of additional consumer protection safeguards as well. These could include placing limits on retail participation and defining rules on the use of leverage while trading crypto.
MAS’ CFO Sopnendu Mohanty said this month that it would be a long time before the crypto space became suitable for retail participation. He believes in a use-case driven approach to Web3, and as it stands, the space is flooded with projects which don’t have an underlying economic value.
These developments have caused some Singapore-based companies to reevaluate their future in the country. What Mohanty describes as a “responsible Web 3.0 growth” has been perceived as restrictive, when compared to other crypto-friendly countries.
Germany now acknowledges the value of crypto as a long-term investment for savers. Saving banks across the country have started offering crypto trading services to their customers. Germany also has a no-taxation policy on long term crypto gains, much like Singapore.
In the UAE, Dubai and Abu Dhabi have been making a push to attract crypto companies as well. Dubai recently began licensing crypto companies, with an approval process that seems to be far more relaxed than Singapore’s.
In April, Pang Xue Kai — CEO of Indonesia-based exchange Tokocrypto — told Financial Times, “Singapore is definitely losing some of its shine and attractiveness… There are more open countries like Dubai.”
“Dubai has become an exotic place for people to stay and work,” Pang tells Vulcan Post. “The city is full of digital nomads, [who value] crypto as an investment instrument. Moreover, the government has created supportive regulations in previous years and have embraced the concept of the metaverse, a digital city.”
Binance CEO Changpeng Zhao offered that Singapore was taking a “slightly more cautious approach” when compared to Dubai. At the end of last year, Binance withdrew its application to be licensed in Singapore and has now established a regional headquarters in Dubai.
The Bybit crypto exchange, formerly based in Singapore, has now relocated its headquarters to Dubai as well. Other crypto companies which have established a presence in the city include Crypto.com and FTX.
Not all companies are enticed by relaxed regulations. Pang acknowledges that Singapore’s regulations have helped protect consumers and encouraged more to venture safely into the crypto market. This is what allowed the country to become a global crypto hub in the first place.
“The Singaporean government has helped stimulate the growing crypto market and has offered strong support for traders,” he says. “To maintain and improve their status as a global crypto hub, the government needs to harmonise their relationship with private sector blockchain companies, both in Singapore and beyond. ”
Bybit, despite its move to Dubai, remains content with the crypto landscape in Singapore as well.
We welcome Singapore’s regulators and their engagement with the crypto industry. Singapore has already made progress towards a regulatory environment that will aid the development of our industry for decades to come.– Igneus Terrenus, Policy Advocate, Bybit
We welcome Singapore’s regulators and their engagement with the crypto industry. Singapore has already made progress towards a regulatory environment that will aid the development of our industry for decades to come.
Among many of the companies which continue to operate here, there’s an acknowledgement of Singapore’s regulations being well-reasoned. The MAS has always made consumer protection a priority, and while decisions such as the advertising ban might seem restrictive, they don’t come as a surprise.
Companies enjoy a sense of stability as they can roughly gauge the direction in which future regulations are headed.
“Thoughtful regulation done right creates even healthier markets, which unlocks the promise of crypto for the better,” says Gemini’s Alex Phillips. “As such, Singapore is still in a prime position to be a leader in the cryptocurrency space, especially over the long-term.”
Featured Image Credit: Psychic Live Club
MAS’ CFO Sopnendu Mohanty on the future of Web3 and crypto in S’pore
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