When it comes to crypto-friendly countries, Singapore is one of the best - TopForex.Trade

When it comes to crypto-friendly countries, Singapore is one of the best

Selva Ozelli, an international tax attorney and CPA, writes on taxes, AML/CFT regulations, and legal challenges affecting crypto and blockchain in her monthly Expert Take column.

At the end of 2021, Coincub recognized Singapore as the world’s most crypto-friendly country due to its “strong economy, favorable legislative climate and high rate of cryptocurrency adoption,” which was based on a year in which Bitcoin (BTC) and Ether (ETH) increased 100% and 300%.

The blockchain industry has benefited greatly from the efforts of Singapore’s regulators. Coincub’s No. 1 rating was confirmed when the cryptocurrency market began collapsing and reached bear market territory in January 2022, when the Monetary Authority of Singapore (MAS), the country’s principal financial regulatory authority, adopted fast regulatory steps.

As of mid-January, Singapore’s MAS established consumer protection legislation to protect investors who are exposed to continual reminders of digital assets via billboard marketing or crypto ATMs.

Blockchain technology development and new crypto use cases are encouraged, but cryptocurrency trading is “extremely dangerous and not suited for the public,” according to a statement from the MAS. To avoid “trivializing the substantial hazards of trading,” cryptocurrency should not be portrayed in this way.

 

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Singapore’s Payment Services Act comes into force in January 2020, in response to the Financial Action Task Force’s 2018 update to its cross-border risk standards for cryptocurrencies. The Payment Services Act regulates payment systems and payment service providers in Singapore and includes AML and CFT criteria for bitcoin operations.

MAS has been choosy in granting bitcoin company licenses, with many applicants being denied. Among those granted licenses were DBS Bank, OCBC Bank, IBM, and two institutional-grade Bitcoin funds formed by Singapore-based fund manager Fintonia Group.

Coin offers in the form of ICOs

Initial coin offerings (ICOs) have been on the rise since August 2017, when the MAS published rules stating that ICOs that issue securities are subject to regulation. For further clarification and guidance on cryptocurrency law, Singapore authorities issued “A Guide to Digital Token Offerings.”

Cryptocurrency taxation

In Singapore, taxes are low. By 2020, the Singapore Inland Revenue Authority expects digital payment tokens to be exempt from the country’s goods and services tax, as reported by Ernst & Young’s Desmon Teo and Lee Vin Wee. Due to Singapore’s lack of capital gains taxes, cryptocurrency sales are also exempt from taxation.

Adoption of blockchain technology

By using blockchain technology in many sectors of the economy as well as advantageous legislative and tax policies, Singapore has quickly become a worldwide cryptocurrency center, despite the fact that it is a major financial center, shipping hub, and tenth-highest GDP per capita. Crypto and blockchain hold great promise for speeding up cross-border payments and trade finance, but MAS is wary of using them as investment assets for regular investors.

Crypto exchanges

One survey found that 43% of Singaporeans own cryptocurrency. Comparatively, 11.3% of South Africans hold crypto, 10.5% of Americans, and 9.8% of Swedes. Some of the most popular crypto exchanges for retail investors include Coinbase, Kraken (FTX), Bybit (BYB), KuCoin (KUC), Vauld (IR), Gemini (COIN), Tiger Brokers (TIGER) and Syfe (SYF).

Preceding the announcement that Binance Singapore would close by mid-February 2022, Binance purchased an 18% share in Singapore-regulated private securities exchange Hg Exchange. Reuters then published a special investigation on Binance’s opaque corporate structure and lax global AML and CFT compliance.

Banking

A multitude of big banks — including Barclays, BNP Paribas, BNY Mellon, Citi, Deutsche Bank, HSBC, Orient Securities, Standard Chartered, Societe Generale and United Overseas Bank — have joined Marketnode, a digital asset joint venture of major investment holding company Singapore Exchange (SGX) and government-backed investment firm Temasek. The goal is to explore the use of blockchain technology focused on capital markets workflows through smart contracts, ledger and tokenization technologies. Marketnode also partnered with Singapore-based fintech firm RootAnt Global and United Kingdom-based blockchain platform SETL to focus on fixed income and multi-asset end-to-end infrastructure development.

The digital currency of the central bank

According to the Atlantic Council, Singapore is one of 87 countries experimenting with a central bank digital currency (CBDC) as part of Project Ubin.

In an effort to improve cross-border payment speed, affordability, and transparency, the MAS has been testing CBDCs and discussing multiple CBDC arrangements. A multi-currency wholesale settlement network for the issue and distribution of multiple CBDCs has been established in conjunction with China.

Sustainable cryptocurrency mining firms

Miners solve difficult calculations on sophisticated computers to get new tokens by using significant amounts of electricity, which is needed to run the machines. As the price of cryptocurrencies fluctuates, China, previously the world’s top crypto miner, emphasized this instability when it closed down crypto mines in May 2021.

There are four Singapore-based cryptocurrency mining businesses that have operations outside of Singapore: Bitdeer, Saitech, Sharemine AI and BitFuFu. Bitdeer and Saitech are vying with one another for Nasdaq’s public listing. For industrial, agricultural, and domestic use, Saitech recycles mine waste energy. In order to mine, Bitdeer and Sharemine AI use renewable hydroelectric and solar energy.

Startups

With the primary objective of promoting and expediting blockchain usage in Asia beyond financial services applications, Singapore startup capital firm Trive Ventures founded Tribe Accelerator. A blockchain accelerator financed by Singapore’s government has been launched (it is backed by MAS and Temasek).

Some of the other supporters include Citibank; IBM; Intel; BMW; Korea Investment Partners; Mandiri Investment Management Singapore; Greg Kidd — an early Twitter, Coinbase and Square investor; and Hong Kong-based investment firm Stellar Partners. Tribe has thus far invested in more than 30 companies, totaling more than $1 billion. Microsoft announced the Singapore GreenTech Challenge in November 2021 in an effort to support Singapore’s Green Plan by accelerating the success of businesses.

 

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