General Economy in Singapore as Southeast Asian Leaders Agree to Fast Track Regional Trade Pact
Singapore Blockchain Week happened this past week. While there have been
a few announcements from companies, some of the most interesting
updates have come from regulators, and specifically, the Monetary
Authority of Singapore (MAS). The financial regulator openly discussed
its views on cryptocurrency and plans to develop blockchain technology
locally.
For those who are unfamiliar, Singapore historically has been a
financial hub in Southeast Asia, but now has also gradually become the
crypto hub of Asia. Compared to the rest of Asia and the rest of the
world, the regulators in Singapore are well-informed and more
transparent about their views on blockchain and cryptocurrency. While
regulatory uncertainties still loom over Korea and Japan, in Southeast
Asia, the MAS has already released its opinion “A Guide to Digital Token
Offering” that illustrates the application of securities laws to
digital token offerings and issuances. Singaporean regulators have
arguably been pioneering economic and regulatory standards in Asia since
the early days of the country’s founding by Lee Kuan Yew in 1965.
Singapore is the first stop for foreign companies in crypto
In the past, I’ve said that Thailand is one of the most interesting
countries in crypto in Southeast Asia. Nonetheless, for any Western or
foreign company looking to establish a footing in Asia, or even for any
local company in any Asian country looking to establish a presence
outside of their own country, Singapore should be the first stop. It has
become the go-to crypto sandbox of Asia.
There are a number of companies all over Asia, as well as in the West,
that have already made moves into the country. And the types of
cryptocurrency projects and exchanges that go to Singapore vary widely.
A few months ago, a Korean team called MVL introduced Tada, or the
equivalent of “Uber” on the blockchain, in Singapore. Tada is an
on-demand car sharing service that utilizes MVL’s technology. The Tada
app is built on MVL’s blockchain ecosystem, which is specifically
designed to serve the automotive industry, adjacent service industries,
and their customers. In this case, MVL was looking to test out its
blockchain projects in a progressive, friendly jurisdiction outside of
Korea, but still close enough to its headquarters. Singapore fulfilled
most of these requirements.
Relatedly, Didi, China’s ride-sharing company, has also looked to build
out its own blockchain-based ride-sharing program, called VVgo. VVgo’s
launch is pending, and its home is intended to be in Toronto, Singapore,
Hong Kong or San Francisco. Given Singapore’s geographic proximity and
the transparency of its regulators, it would likely be a good testing
ground for Didi as well.
This week, exchanges such as Binance and Upbit from Korea have also
announced their plans to enter the Singaporean market. A few days ago,
Changpeng Zhao, CEO of Binance, the world’s largest cryptocurrency
exchange, announced the launch of a fiat currency exchange that will be
based in Singapore. He also mentioned his company’s plan to launch five
to ten fiat-to-crypto exchanges in the next year, with ideally two per
continent. Dunamu, the parent company of South Korea’s largest crypto
exchange Upbit, also just announced the launch of Upbit Singapore, which
will be fully operational by October.
The team at Dunamu mentions how they are encouraged by MAS’s attitude
towards cryptocurrency regulation and the vision of the country’s
government to establish a strong crypto and blockchain sector. They also
believe Singapore could be a bridge between Korea and the global
cryptocurrency exchange market.
From a high level, the supply of crypto projects and trading volume in
Singapore is certainly strong, and the demand also appears abundant.
Following China’s ICO ban in late 2017, Singapore has become home to
many financial institutions that can serve as potential investors for
ICOs.
As recently featured on the China Money Network, Li Dongmei wrote that:
What is supporting such optimism is the quiet preparation of capital
on a massive scale getting ready to act the “All In Crypto” mantra. “In
recent months, there have been over a thousand foundations being
established in Singapore by Chinese nationals,” said Chen Xianhui, an
agent specialized in helping Chinese clients to register foundations in
Singapore. Most of these newly established foundations are used setting
up various token investments funds.
Singapore has become the first choice when crypto companies from both
the West and the East are initially scoping out their market strategies
in Asia, and companies want an overarching idea of what’s going on in
the cryptocurrency world in the region.
In fact, it’s often the case that Southeast Asian crypto companies and
leaders gather in Singapore before they go off and do crypto businesses
in their own countries. It’s the place for one wants to tap all of the
Asian crypto markets in one single physical location. The proof is in
the data: in 2017, Singapore ascended to the number three market for ICO
issuance based on the number of funds raised, trailing the United
States and Switzerland.
Crypto is thriving due to regulator openness
The Monetary Authority of Singapore (MAS) takes a very practical
approach to crypto. Currently, MAS divides digital tokens into utility
tokens, payments tokens, and securities. In Asia, only Singapore and
Thailand currently have such detailed classifications.
While speaking at Consensus Singapore this week, Damien Pang,
Singapore’s Technology Infrastructure Office under the FinTech &
Innovation Group (FTIG), said that “[MAS does] not regulate technology
itself but purpose,” when in conversation discussing ICOs in Singapore.
“The MAS takes a close look at the characteristics of the tokens, in the
past, at the present, and in the future, instead of just the technology
built on”.
Additionally, Pang mentioned that MAS does not intend to regulate
utility tokens. Nevertheless, they are looking to regulate payment
tokens that have a store of value and payment properties by passing a
service bill by the end of the year. They are also paying attention to
any utility or payment tokens with security features (i.e. a promise of
future earnings, which will be regulated as such).
On the technology front, since 2017, Singapore authorities have been
looking to use distributed ledger technology to boost the efficiency of
settling cross-bank financial transactions. They believe that blockchain
technology offers the potential to make trade finance safer and more
efficient.
When compared to other Asia crypto hubs like Hong Kong, Seoul, or
Shanghai, Singapore can expose one to the Southeast Asia market
significantly more. I believe market activity will likely continue to
thrive in the region as the country continues to act as the springboard
for cryptocurrency companies and investors, and until countries like
Korea and Japan establish a clear regulatory stance.
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