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In recent weeks, I had enquiries pouring in from friends all around the world, about Singapore’s upcoming licensing for crypto firms.
Interest towards our local regulations has certainly been brewing with the launch of Singapore’s Payment Services Act– to go alongside the much-acclaimed Digital Banking License–as we look to further cement our place as a forward-thinking Fintech Hub on the global roadmap.
While bringing crypto trading to the mainstream through Coinhako has been a rewarding process, it hasn’t always been easy. Prior to having formal regulations in place, there were many obstacles we had to overcome — personal bank accounts getting shut, and home loans getting rejected. We pride ourselves on doing “the right thing”, and have strived to work within the perimeters of legal guidelines.
Despite facing some roadblocks over the past few years, we are encouraged by the way regulations and inclusion of cryptocurrencies have developed locally.
A picture speaks a thousand words. This one in particular speaks a million more.
As an industry, we have been eagerly anticipating this license for many years now.
TLDR: A well structured regulatory framework, balanced between regulations and innovation, as well as its world-renowned business landscape has businesses from everywhere looking at Singapore as the ideal place to headquarter their Asia operations.
Having local regulations in place will work in favor of crypto firms — as licensing legitimizes local firms, strengthen their position in the blockchain space, and will allow for greater integration with the wider financial markets.
Our regulatory framework may even entice foreign exchanges to look towards setting up shop in Singapore.
With Singapore being a hotbed in Asia for blockchain businesses, it is no surprise that many crypto firms — both local and international — have been ramping up their compliance efforts in preparation for the license.
After considering the regulatory climate pertaining to crypto businesses in other countries, it is no wonder that many companies are looking towards obtaining a license to operate in Singapore. After all, Singapore has always prided itself on being a conducive and pro-business financial hub; why should it be any different for crypto?
To understand the hype behind Singapore’s Payment Services Act license, I took the time to survey the regulatory movements in some other major crypto markets; here are the insights I have gathered:
Japan : Tighter Regulations and Heavier Responsibilities
Crypto regulations have been tightening up as the technology faces greater scrutiny, to go alongside an increasing backlog of license applicants in Japan.
2019 amendments to the country’s Payment Services Act, and the Financial Instruments and Exchange Act will institute further tightening of regulations, to increase user protection and promote higher levels of transparency. Custodian services, such as crypto wallets, would face more restrictions, having to be equally accountable for risks as crypto exchanges.
Crypto businesses can also anticipate more rigorous safeguarding measures to be set in place.
These measures will make it mandatory for exchanges using hot wallet systems to hold equal value of their users’ stored cryptocurrencies so that they are able to reimburse users, in the event of a system level hack or funds stolen from the platform. These measures will officially kick into force in April 2020.
While Japan’s framework draws close parallels to Singapore’s Payment Services Act, our regulations will not be governing cryptos down to such a deep level, while in favour of further development of the technology.
Regulators will monitor trends and amend safeguarding regulations where conducive.
China: Rising Blockchain Adoption, Restrictions on Cryptocurrency Trading
Meanwhile, the Chinese market is beginning to open its doors for blockchain adoption.
President Xi has recently encouraged China to embrace blockchain technology, and has invested efforts in educating the public about blockchain to drive adoption.
As of 1st January 2020, a cryptography law came into effect — aimed at dealing with legal challenges in commercial cryptography use-cases.
While China is definitely advancing forward in terms of blockchain acceptance, the world’s second-largest superpower has demonstrated that they are not as ready to include cryptocurrencies — with the key points of access such as trading cryptocurrencies still banned in China.
Korea: Focus for 2020 on Taxation Policies
The blockchain space is very much active in South Korea, with major crypto exchanges like Bithumb and Korbit headquartered in Seoul. Despite being the third largest crypto market by volume, South Korea has yet to fully regulate the local crypto market.
While the past few years have been a turbulent ride–with top exchanges getting hacked and regulatory silence from the government–for the South Korean market, a new bill was passed late last year, to help crypto business attain legitimacy through greater transparency.
In 2020, predictions by industry experts reveal that the focus is likely to be on taxation policies for crypto businesses.
USA : Vague Framework and Ambiguous Regulations
Looking beyond Asia, the regulatory direction of the market in the USA remains in a nebulous position, as crypto-related policies are dispersed across the various states.
States like Wyoming and Colorado have imposed crypto-friendly regulations, for example, passing a bill that exempts cryptocurrencies from property taxation. Other states like New York have passed laws that are restrictive in nature, cornering a number of crypto exchanges into exiting the market.
As a whole, the US introduced the proposed Cryptocurrency Act 2020, to ensure clarity in the crypto market. At present, regulators in the States are looking for a way to trace all cryptocurrency transactions — which will prove to be extremely tricky, considering the anonymous nature of cryptocurrency transactions and its privacy enabling features.
An unclear regulatory direction, a vague framework and ambiguous regulations for the cryptocurrency industry could all threaten the US’ stronghold as a global leader in technology.
Malta : Crypto-Friendly Regulations
In the European Union (EU), the Republic of Malta, a country that is only half the size of Singapore, is actually one of the most conducive places for crypto — seeing as how crypto exchanges are legal there.
Regulations have been in place as early as November 2018, requiring blockchain-related businesses to have detailed licensed certifications. This has earned the Island State its global reputation as “blockchain island”.
If anything, this shows that size does not matter in the blockchain world, but sound infrastructure and business landscapes does. All of which, Singapore excels in.
The Hype Behind Singapore’s Payment Services Act (PS Act)
A robust regulatory framework, coupled with a global reputation as a strong financial hub in Asia, will play a part in enabling us to provide a fertile environment for crypto businesses to thrive.
While there are several other noteworthy crypto markets — such as Panama, Gibraltar, Estonia and London — Singapore will no doubt continue to be one of the biggest markets for crypto. The upcoming license is a highly-coveted one, and it should come as no surprise to anyone.
What should you do if your crypto firm is interested in exploring this license? Follow my threads–like my medium page, my Linkedin or other chat groups– as I will be publishing a useful one-pager guide in some of those places very soon!