Crypto groups take refuge in Singapore as global regulators crack down

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Global cryptocurrency groups are expanding their presence in Singapore, drawn to the city-state’s friendly regulatory environment as other markets crack down on the industry.

Among the executives moving to the Asian financial hub is Changpeng Zhao, founder of Binance, a crypto exchange that processes billions of dollars in transactions per year. Gemini, an American stock exchange founded by the Winklevoss twins, is also increasing its staff in Singapore.

The city has yet to issue licenses to cryptocurrency companies, but it has granted exemptions to some of the industry’s biggest players, allowing them to serve local and institutional investors.

While the growth of the crypto industry has been supercharged this year, regulators in markets such as the US, UK and China have cracked down on the industry. Hong Kong, a rival Asian financial center, is set to restrict cryptocurrency trading to accredited or institutional investors under new law.

Singapore has been much more welcoming. Sovereign wealth fund GIC and state-owned investment company Temasek have invested hundreds of millions of dollars in the sector. The Monetary Authority of Singapore has made it easier for foreign crypto groups to create and serve residents, albeit with restrictions, including limits on transactions. Singapore Exchange has introduced two cryptocurrency indices.

“Crypto brothers around the world have read the writing on the wall and realized that Singapore Inc is embracing the asset class,” said the founder of a city-based crypto startup.

Binance has obtained a license exemption in Singapore and posted more than 200 job postings located in the city on LinkedIn in the past month. Vitalik Buterin, the founder of the Ether cryptocurrency, is also based there.

Binance billionaire founder Changpeng Zhao is a resident of Singapore © Reuters

OSL, a Hong Kong-based exchange, has also been granted a license exemption and plans to double its workforce by the end of the year.

“The number one deciding factor when considering where to locate your operations is regulation. Singapore is clear and specific on how it engages with the cryptocurrency and digital asset markets, ”said Kanny Lee, OSL’s Singapore bureau chief.

Gemini, founded by Cameron and Tyler Winklevoss, has chosen Singapore as its Asian headquarters and plans to have around 50 employees by the end of 2021, down from just one when the office launched in June last year.

“Singapore is a major financial hub for Asia with a good client base, particularly in the private wealth management arena. We’ve had conversations with wealth management companies because a lot of them need crypto solutions, ”said Jeremy Ng, Gemini Managing Director for Asia.

Jihan Wu, the billionaire co-founder of Chinese cryptocurrency mining technology group Bitmain, has launched a crypto startup in the city.

The MAS said around 40% of applicants under Singapore’s Payment Services Act wanted to provide digital payment token services, but there had been no “significant upturn” in requests “directly attributed to actions taken by other countries”.

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Chia Hock Lai, president of the Blockchain Association of Singapore, said a number of Hong Kong-based players have established offices in the city. Hong Kong’s legislation that would restrict trade to accredited investors “is indicative” of its stance on digital currencies, he said.

Singapore’s economy is heavily dependent on services such as commodity trading and financial transactions.

“Without a natural resources industry to fall back on Singapore cannot risk being too hostile to an industry that could be a big winner in attracting talent and business,” said Daniel Burke, Singapore-based managing director for US cryptocurrency custodian BitGo, adding if Singapore has failed to put in place the right framework, it could deprive the city of much-needed future activities.

However, some industry figures have said that a lack of clarity on when MAS will approve licenses is becoming problematic. “We’re getting a few potential clients who say they won’t do business with us until we have a proper license,” one requester said. “Unfortunately, it is not yet known when this will happen.”

Additional reporting by Stefania Palma in Singapore

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