When it comes to cryptocurrency adoption, the Asia-Pacific region is way ahead of the curve. The likes of South Korea, Hong Kong, China and Japan were early adopters of crypto and blockchain technology; now, Singapore is quickly emerging as a world leader in the mainstream adoption of digital currency.
Regulatory Stance
The Monetary Authority of Singapore (MAS) is the country's main financial regulatory body. In the past, MAS took a somewhat hands-off approach to crypto and its underlying blockchain technology. On several occasions, it even urged the public to exercise caution and understand the associated risks before investing in cryptocurrencies.
The public should be aware that there is no regulatory safeguard if they choose to trade on unregulated digital token exchanges or invest in digital tokens that fall outside of the remit of MAS rules a spokesperson explained at the time.
In 2018, MAS returned funds to the Singapore-based investors of an unnamed ICO, saying it broke the rules by failing to consult MAS before trading what it defines as digital assets. It also extended a warning to eight crypto exchanges, stipulating that they inform the regulator before trading cryptocurrencies that are considered securities. This has meant that trading cannot commence until they have been appointed as an approved exchange or market operator.
In their own words: “If any digital token exchange, issuer or intermediary breaches our securities laws, MAS will take firm action.”
But this shouldnt be interpreted as disapproval, or an unwillingness to integrate cryptocurrency into Singapore's existing financial landscape. Rather, it's a positive sign that the Singaporean authorities recognise the need for rigorously-applied regulation if the process is to be smooth and the effects long-term.
In 2017, MAS addressed regulation in two stages. Firstly, a statement released in August (in response to a spate of ICO launches) indicated that if the ICO was deemed to be issuing securities, they would be subject to regulation. Three months later, it clarified this by publishing ‘A Guide to Digital Token Offerings’, providing further explanation and direction around the regulation of cryptocurrency in Singapore. This updated the 2002 Risk-Based Capital framework, which had become unfit for purpose thanks to the emerging technologies and new business models that cryptocurrency has brought with it.
The 2017 guide outlined multiple changes, including classifying blockchain and crypto companies into three tiers depending on their specific operations; reducing capital requirements (the level of liquidity required to trade in Singapore); simpler overall regulatory requirements; and risk management for technology and outsourcing.
The result has been much needed clarity around cryptocurrency regulation, leading to the creation of the Payment Services Act by Mas earlier this year. This provides a progressive framework that regulates payments systems and digital payment token services in Singapore, allowing certain cryptocurrency businesses to continue operating in the country, and giving consumers and businesses confidence to operate in the space. Wirex have been given a temporary exemption from holding this licence at the moment, and are hoping to secure it in the coming months.
This reason, coupled with Singapore's existing reputation as a finance hub, is likely to make the country a haven for crypto exchanges and startups over the next few years.
Startups & Exchanges
Singapore’s proximity to China, where crypto-trading has been outlawed, has also made it an attractive proposition for businesses that have found themselves having to relocate. For example, the CEO of imToken announced that they relocated to the country, mostly due to the fact that it was friendly to blockchain technology.
Singapore state investor, Temasek, has recently joined the Libra Association as the first Asian investor, as well as creating several subsidiary companies focusing on blockchain applications such as digital identity and trade finance. The Libra Association has gained significant publicity in the previous months as the company leading Facebook’s proposed digital currency, however, this is not without controversy. Political pushback has meant that it has turned to companies such as Temasek in crypto-friendly regions to win over global regulators, and help to push the project forward.
Last year, Wirex, a UK FCA-registered digital money payment platform, opened the doors of its Singapore office. With the core mission of bridging the gap between traditional and digital currency, Wirex already has more than 3.1 million customers in 130 countries, and this move marked the start of its rapid expansion further into the APAC region. The move was well-received, with Wirex experiencing huge levels of growth in the region - back in May, we announced that we'd achieved over 200% growth in our monthly exchange volume in the APAC region.
Conferences
Singapore plays host to many high-profile fintech, blockchain and cryptocurrency conferences throughout the year. Each November/December, the Singapore Fintech Festival takes place with thousands of participants converging on the Singapore Expo Convention and Exhibition Centre to discuss all things FinTech. This annual event is the brainchild of MAS, The Associations of Banks in Singapore and SingEX Holdings. Although the festival is looking to be almost entirely virtual this year, the agenda includes Distributed Ledger & Digital Currency and RegTech, as well as sessions on the pandemic recovery and financial inclusion.
The festival also comprises a number of smaller events, including The Fintech Conference & Exhibition, The Global Fintech Hackcelerator Demo Day, The AI Finance Summit and The Fintech Awards. Each event will feature keynote speakers from leaders of international financial institutions, central banks, regulatory agencies and venture capital firms.