The stakes are rising for Singapore’s big crypto bet

[ad_1]

Banned by China Faced with repression in South Korea and new restrictions in Hong Kong, the cryptocurrency industry has taken hold of Singapore as an unlikely Asian alternative.

A country of 5.5 million people has long relied on financial services to support its $ 344 billion economy. Currently, we are involved in fierce competition with Hong Kong and Tokyo for the crown of Asia’s global financial center.

Efforts in this sector extend to FinTechs, which attempt to disrupt traditional banking operations. In socially conservative countries, authorities not only praised the potential benefits of crypto, but also supported it. By legislation.

As of January 2020, cryptocurrency companies can apply for operational licenses under the Payment Services Act, a law that regulates companies that process digital payments and token transactions such as Bitcoin.

Loo Siew Yee, deputy managing director of the Monetary Authority of Singapore’s Policy, Payments and Financial Crime group, told the Financial Times:

But under receptivity is a cold calculation of policy makers. Opening Singapore’s door to the mushroom-hunting crypto industry is Asia’s dominant financial center and could ultimately prove to be an important weapon in the quest for a country of global value.

Singapore’s openness contrasts with the ever-increasing trade in other jurisdictions. Coinbase, the largest cryptocurrency exchange listed in September, fired Broadside On Twitter, the United States Securities and Exchange Commission complained of “brutal behavior.”

Discomfort with Binance

But as Beijing, Seoul and Hong Kong cool down cryptocurrencies, the potential dangers of this approach emerge. This is clearer than the following checks: Binance, influential founder Changpeng CZ Zao is one of the world’s largest cryptocurrency exchanges based in Singapore.

The company has been criticized by other regulators this year for issues such as consumer protection and compliance with anti-money laundering rules. Binance says it takes compliance obligations seriously and is tightening up some of its client verification requirements.

In September, MAS added Binance’s global site to its list of investor alerts. This has prevented clients in Singapore from effectively using Binance. However, regulators have not affected the tightly regulated local version of the site. This means that even if the company were under attack globally, Singaporeans could still use its local site.

When there is an open rebellion from a crypto exchange operator against the financial watchdog Elsewhere, analysts say there may be evidence gained by regulators playing the right cop.

“Singapore balances being bold in capital markets and being very conservative socially,” said Dragonfly Capital, a global crypto-focused venture capital fund in Singapore. Haseeb Qureshi, a partner of Jing, said. They must show that they are open to innovation and friendly to those who take business and financial risks, he said.

Unlike the US Parliament, the Singapore government has played a leading role in the development of the industry.

Along with Binance, some of the world’s largest cryptocurrency exchanges, such as Gemini, Coinbase, and Crypto.com, have all applied for operating licenses. Many received tax exemptions while they waited. That is, they can serve both individual and institutional investors. Regulators granted the first full license to an independent reserve based in Australia on Friday.

Take notes on Ethereum

This approach has been applauded by people in the fast growing industry.

“Singapore has a very long-term view of this,” said the founder of a cryptocurrency startup that caters to wealthy individual and family offices. “A few years ago, I went to hear Vitalik Buterin. [Ethereums co-founder] While talking in town, three people from MAS carefully took notes in my line. “

Sander Laugs, head of institutional investors at Swiss bank Seba, which is focusing underground to expand its presence in Singapore, said the authorities’ incentives and industry regulations provide important guarantees. to augment.

Almost 20% of requests were withdrawn or rejected by MAS because they did not meet the criteria for managing money laundering, terrorist financing or technological risk.

Companies that don’t have standards will have a hard time getting licenses and doing business in the usual way, says Rags.

And it’s not just foreign crypto exchanges that are expanding into Singapore. The country’s national banks are trying to put a lot of effort into the boom.

The middle division of DBS, the country’s largest bank, received MAS ‘in-principle’ approval in August and began providing crypto services such as Bitcoin transactions to institutional investors. Last year, banks launched a digital exchange that offers cryptocurrency trading and custody services to certain accredited investors.

Eng-Kwok Seat Moey, Head of Capital Markets at DBS, said: It is important for Singapore to remain a global financial hub and prepare for the digital mainstream. It’s time to help transform capital markets.

The desire for cryptocurrency has spread to GIC, Singapore’s sovereign wealth fund. This year, GIC invested in the parent company of the Hong Kong-based crypto exchange OSL. Vertex Ventures, a venture capital fund owned by state-owned investment firm Temasek, backs Binance Asia, the Singapore division of the exchange.

Target Tokyo

Beijing’s statement last week that all crypto activity is illegal not only underscored Singapore’s appeal, but doubts Tokyo is the country’s biggest threat in the fight to become an Asian crypto hub. There was no room.

Japanese regulators have spent the most time balancing the risks and benefits of adopting cryptocurrencies. The Financial Services Agency was the first to recognize the legality of crypto assets, and the government of Japan defined the world’s first crypto exchange company in 2017.

They did so to establish a reputation for embracing innovation in this new financial industry. But Japan’s experience also highlights the potential pitfalls Singapore faces.

Even as the FSA prepares to create regulations, Japanese courts have uncovered the collapse of the Tokyo-based Mt. Gox stock exchange, which once handled 80% of Bitcoin transactions globally. .. Shortly after Japan led the legalization of the exchange, Japanese Coincheck customers were victims of a virtual theft of around $ 500 million worth of XEM coins.

This episode undermined FSA’s reputation and the implicit claim that it went even further in knowing how to protect customers from many potential dangers by legalizing crypto first.

An official of a cryptocurrency exchange registered in Japan and dealing with the FSA said regulators were grappling with the dilemma.

“They are eager to showcase Japan as an outstanding hub for financial innovation, and the welcome face of crypto is a good way to do that,” said a crypto official. “At the same time, they can see how serious the risk is, given how many young Japanese people are investing heavily in this area.”

This year, the surge in the prices of Bitcoin, the most well-known cryptocurrency, has attracted top investors such as Paul Tudor Jones and Stanley Drucken Miller.

ARK founder Cathie Wood is a cryptocurrency evangelist and estimates it will be worth $ 500,000 over five years.

According to Wood, the bigger question for governments is how to balance the threat of turbulence posed by cryptocurrencies with the associated benefits of financial activity.

It will be very difficult to shut down decentralized financial services, Wood said. Countries understand that if they are to attract innovation, they need a user-friendly regulatory system that works with innovators, not beyond their focus.

Singapore is playing and has the right balance.

Stakes Rise For Singapore Big Crypto Bet Source Link Stakes Rise For Singapore Big Crypto Bet

[ad_2]