Singapore, which was traditionally the favoured home for large crypto businesses, may lose a few as it tightens regulations and seeks greater control. The city-state just passed legislation tightening controls for bitcoin service providers operating in the city.
All bitcoin firms headquartered in Singapore must be licenced, according to the Financial Services and Markets Bill. This law now applies even to businesses that only serve customers from foreign nations.
The strategy might serve as a model for countries looking to attract bitcoin businesses and eventually profit from them through taxes. They must, however, balance this with their ability to comply with global anti-money laundering and anti-terrorism regulations.
Singapore’s Monetary Authority already controls cryptocurrency service providers operating in the country.
The new legislation, however, empowers the regulator to examine Singapore-based service providers operating abroad, as well as the legal ability to assist foreign regulatory organizations and agencies in their investigations.
According to experts, the new legal and regulatory framework reflects Singapore’s proactive readiness to adjust to the cryptocurrency environment, rather than simply prohibiting the asset class in certain countries.
“As long as this clause remains in place, and licenses prove difficult to get, Singapore is unlikely to sustain any plausible ‘Crypto Capital of Asia’ narrative,” Andrew M. Bailey is a fellow at the Bitcoin Policy Institute and an associate professor at Yale-NUS College in Singapore.
Previously, Singapore was the go-to location for bitcoin entrepreneurs fleeing China’s crypto crackdowns. However, the exponential growth and “crypto hub” image were followed by increased global scrutiny, causing the MAS to step in with stronger regulations, according to analysts.
As the sector continues to expand to the UAE, Singapore-based cryptocurrency exchanges Crypto.com and Bybit have announced plans to create operations in Dubai.
Binance has moved its operations out of Singapore and has just announced the successful acquisition of cryptocurrency licences in Dubai.
“It is true that some of them (crypto firms) are leaving,” Forkast was told by David Lee Kuo Chuen, a lecturer at Singapore University of Social Sciences. “I must admit that the pace of the license granting is not to the expectation of the industry.”
Over 170 applicants have applied to provide Digital Payment Token services since the Payment Services Act went into effect in January 2020. Only four financial firms have been granted licenses so far, according to the MAS website.