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Is Singapore's status as a crypto hub weakening?

Updated: Jul 25, 2024
Published: Apr 5, 2022
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Singapore has been praised as one of the most crypto-friendly countries in the world as crypto investors and companies have moved there, but recent developments in the country tell a slightly different story.

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Singapore's new crypto law

Previously, only companies providing services in Singapore had to be licensed. However, Singapore's parliament passed a law on Tuesday requiring crypto companies based in the city-state that only operate outside the country to be licensed as well. This is part of the new Financial Services and Markets Bill, which gives the Singapore Monetary Authority more powers to ban individuals deemed unsuitable for critical jobs, activities and functions in the financial industry.

Singapore is currently trying to strike a balance between welcoming crypto companies and enforcing strict regulations. However, this raises the question of whether the country should really become a crypto hub. For example, DBS, one of the largest banks in Singapore, recently announced that it will not expand its crypto trading services to retail customers due to regulatory concerns. In general, regulators in Singapore are increasingly distinguishing between retail and institutional activities, as the country has also banned crypto service providers from marketing or advertising their services.

Will businesses look for alternatives?

The new regulations do not make Singapore unattractive to crypto companies and investors, but it remains to be seen whether Singapore will become a crypto hub for retail investors and institutions, as it does not seem to offer retail investors as much freedom as some may have hoped. The main reason the country remains attractive is the tax exemptions for non-resident offshore firms and the absence of a capital gains tax in the country, but with offshore firms now also requiring a license to offer crypto trading and long waiting lists forcing firms to operate under an exemption from MAS, some may be looking for alternative options.

A recent example of this is crypto-derivatives exchange Bybit, which has moved its global headquarters from Singapore to Dubai. The crypto exchange received in-principle approval to operate the full range of virtual asset businesses shortly after the introduction of crypto regulations in Dubai, while in Singapore only four financial institutions have received licenses so far since the regulations came into effect in 2020.

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