As China cracks down on cryptocurrency, crypto groups gather in Singapore
The crypto dynamics in Asia are changing rapidly, leaving Singapore perhaps as one of the few remaining crypto hubs in the region.
In the last months, China has been toughening its stance against cryptocurrency, often causing major price fluctuations. In June, it caused Bitcoin to dip below $30,000 for the first time since January, after telling the country’s financial giants to stop trading in cryptos. At the beginning of July, the Chinese dragon roars were heard again with a new crypto crackdown led by the government. More recently, the Chinese authorities punished a company for allegedly being involved in crypto trading activities. As a result, the country’s persecuted crypto traders are exploring other options. Some of them are moving to Singapore, according to an article by the Financial Times, to join the crypto trading movement.
So far, over 300 crypto companies from different parts of the world have applied for licenses to operate in Singapore, according to Bloomberg, and many have already launched their trading operations in the city-state.
Singapore’s regulatory environment and potential for growth make it a very attractive destination for crypto firms that face regulatory storms elsewhere. Most recently, exchange firm Binance moved its operations to Singapore after it was banned in the UK from carrying out regulated activities. The UK isn’t the only country Binance had regulatory troubles with. It also faced problems in Japan, Germany and Ontario, Canada. Another firm that moved to the city-state of Singapore is Gemini, a US exchange that was founded by the Winklevoss twins. Chinese billionaire Jihan Wu also established a fintech platform in Singapore in 2019.
How does Singapore roll the carpet for foreign crypto innovators?
The country’s central bank, the Monetary Authority of Singapore (MAS) is making it easier for crypto innovators to establish their businesses in the affluent island nation. While all crypto-exchange companies are required by law to have formal licenses to operate in the country, they can apply to the MAS for an exemption until their license applications are finalised. This allows them to serve local retail and institutional investors before the licenses are finalised. MAS, according to Bloomberg, is applying “robust standards” in assessing all the applications. At the same time, it considers a number of factors such as the applicant’s ability to implement strong measures against illicit flows, and also evaluates the fitness of shareholders and key appointment holders.
MAS plans to closely monitor the cryptocurrency ecosystem to prevent laundering and illegal activities. However, it clearly doesn’t its approach to date suggests it doesn’t want to stifle innovation and entrepreneurship.
Singapore Exchange has added two cryptocurrency indices. At the same time, Singapore-based sovereign wealth fund GIC and state-backed investment company Temasek have spent hundreds of millions of dollars investing in the cryptocurrency sector.
Cryptocurrencies are not yet legal tender in Singapore, like in El Salvador for example, but are instead labelled as goods that can be used for exchange. There are also certain restrictions on the limits of transactions. However, there is appears to be a positive climate that could nurture fintech and crypto innovations. In Singapore, cryptocurrencies are exempt from capital gains taxes.
Singapore as Asia’s New Cryprohub
The crypto dynamics in Asia are changing rapidly, leaving Singapore perhaps as one of the few remaining crypto hubs in the region. Initial adopters of blockchain technology such as China, Hong Kong and South Korea have been changing their outlook on cryptocurrency. Both China and South Korea have clamped down on crypto exchanges in recent months. Hong Kong so far has been considered as one of the most crypto-friendly countries in the world, however, it is vulnerable to the uncertainty that surrounds China.
A recent study by Crypto Head revealed that Singapore currently ranks third behind the US and Cyprus as the most crypto-friendly country in the world.
The article contains market commentary information, it should not be regarded as investment research or investment advice. Past performance is not a reliable indicator for the future.
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