Outlawed by ChinaFaced with crackdowns in South Korea and new restrictions in Hong Kong, the cryptocurrency industry has seized Singapore as an unlikely Asian alternative.
A country with a population of 5.5 million has long relied on financial services to support its $ 344 billion economy. Currently, we are involved in fierce competition with Hong Kong and Tokyo over the crown of Asia’s global financial hub.
Efforts in this sector extend to FinTech, which is trying to disrupt traditional banking operations.In socially conservative countries, authorities not only praised the potential benefits of cryptography, but also backed it up. By legislation.
Since January 2020, cryptocurrency companies have been able to apply for operational licenses under the Payment Services Act, a law that regulates companies that process digital payments and transactions of tokens such as Bitcoin.
Loo Siew Yee, Assistant 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 from policy makers. Opening Singapore’s door to the mushroom hunting crypto industry is Asia’s dominant financial hub and could ultimately prove an important weapon in the quest for a globally valued country.
Singapore’s openness contrasts with the ever-increasing exchanges in other jurisdictions. Coinbase, the largest cryptocurrency exchange listed in September Fired Broadside On Twitter, the US Securities and Exchange Commission complains about “rough behavior.”
Discomfort with Binance
But as Beijing, Seoul and Hong Kong cool cryptocurrencies, the potential dangers of that approach are emerging. This is clearer than the following controls: Binance, Influential founder Changpeng “CZ” Zao is one of the largest global crypto 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 states that it takes compliance obligations seriously and tightens some of its customer verification requirements.
In September, MAS added Binance’s global site to its investor alert list. This has prevented Singapore customers from using Binance effectively. However, regulators have left unaffected the local tightly regulated version of the site. This means that even if the company was attacked globally, Singaporeans could still use its local site.
When there is a crypto exchange operator Open rebellion against financial watchdog Elsewhere, analysts say there may be evidence gained by regulators who play good cop.
“Singapore balances being bold in the capital markets with being very socially conservative,” said Dragonfly Capital, a VC fund focused on global crypto in Singapore. Haseeb Qureshi, a Jing partner, said. “They have to show that they are open to innovation and friendly to those who take business and financial risks,” he said.
In contrast to the US Parliament, the Government of Singapore has played a leading role in shaping 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 licenses to operate. Many were given tax exemptions while they waited. That is, they can serve individual and institutional investors.On Friday, regulators granted the first full license to an Australian-based exchange Independent reserve..
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. [Ethereum’s co-founder] Talking in town, three people from MAS carefully took notes in my line. “
Sander Laugs, head of institutional investor at the Swiss bank Seba, which focuses on the basement expanding its presence in Singapore, said the industry’s incentives and regulations by the authorities provide important safeguards. increase.
Nearly 20% of applications were withdrawn or rejected by MAS because they did not meet the criteria for money laundering management, terrorist financing, or technology risk.
“Companies that haven’t established standards will have a hard time getting licenses and doing business in the usual way,” says Rags.
And it’s not just the foreign crypto exchanges that are expanding to Singapore. The country’s domestic banks are trying to put a lot of effort into the boom.
The intermediary division of DBS, the largest bank in the country, received “in principle” approval from MAS in August and began providing cryptographic services such as Bitcoin transactions to institutional investors. Last year, banks launched a digital exchange that offers cryptocurrency trading and custodian services to some accredited investors.
Eng-Kwok Seat Moey, Head of Capital Markets at DBS, said: “It’s important for Singapore to remain a global financial hub and prepare for the digital mainstream.“ It’s time to help transform the capital markets. ”
The desire for cryptocurrencies has extended 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, is a supporter of Binance Asia, the Singapore division of the exchange.
Beijing’s declaration last week that all crypto activity is illegal not only highlighted Singapore’s appeal, but doubts that Tokyo is the country’s greatest threat in the fight to become an Asian crypto center. There was no room.
Japanese regulators have spent the longest time balancing the risks and rewards 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 business in 2017.
They did so to establish a reputation for embracing innovation in this new financial sector. But Japan’s experience also highlights the potential pitfalls facing Singapore.
Even as the FSA moves to create regulations, Japanese courts have uncovered the collapse of the Tokyo-based Mt. Gox exchange, which once handled 80% of the world’s Bitcoin transactions. .. Shortly after Japan led the legalization of the exchange, Coincheck’s Japanese customers were victims of a virtual robbery of about $ 500 million worth of XEM coins.
This episode undermined the reputation of FSA and the implicit claim that it went even further in knowing how to protect customers from many potential dangers by first legalizing cryptography.
A head of a cryptocurrency exchange registered in Japan dealing with FSA says regulators are tackling the dilemma.
“They are anxious to present Japan as an outstanding hub for financial innovation, and the welcome face of crypto is a good way to do that,” said a crypto executive. “At the same time, they can see how serious the risk is, depending on how many young Japanese are now investing heavily in this.”
This year, the soaring prices of Bitcoin, the most famous cryptocurrency, have attracted prominent investors such as Paul Tudor Jones and Stanley Drucken Miller.
ARK founder Cathie Wood is a cryptocurrency evangelist and estimates that it will be worth $ 500,000 over five years.
According to Wood, the biggest question for governments is how to balance the threat of turmoil 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 want to attract innovation, they need a friendly regulatory system that works with innovators, not beyond purpose.”
Singapore is gambling and has the right balance.
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