Singapore's ambition: to become the center of the global cryptocurrency industry

As financial centres around the world struggle to find ways to deal with cryptocurrency, one of the fastest-growing assets in the financial sector, Singapore is seeking to consolidate its position as a key player in the cryptocurrency-related business.

Ravi Menon, director of the Monetary Authority of Singapore ((Monetary Authority of Singapore,MAS), which oversees banks and financial companies, said: "We don't think the best way is to ban or ban it [cryptocurrency]." He said MAS was implementing "strong regulation" so that companies that met the agency's requirements and were able to deal with multiple risks could operate the cryptocurrency business.

Countries around the world have different ways of dealing with cryptocurrencies. Although El Salvador has accepted bitcoin as legal tender, Japan has only recently allowed the establishment of a dedicated cryptocurrency investment fund; in the United States, although there are many options to invest in this emerging asset class, but regulators have been watching everything from stable coins to revenue-generating products.

Ravi Menon said: "cryptocurrency-based activities are basically investments in the future, and it is not clear what the future will be." "but if we don't get involved, I think Singapore may lag behind. Getting into the game as soon as possible means we can go one step ahead and better understand its potential benefits and risks. "

For Singapore, which has won a reputation as a global wealth hub, the move is risky. Ravi Menon pointed out that Singapore must improve its precautionary measures to deal with risks, including illegal flows.

Ravi Menon said Singapore was "interested in developing encryption technology, understanding blockchain and smart contracts, and preparing for the Web 3.0world". He acknowledged that banks and other financial institutions would face some of the challenges of financial decentralization, but said Singapore wanted to be "ready" when a "token economy" might arrive in 2030.

Singapore is not the only place with ambitions in cryptocurrency. Efforts are also under way in different regions such as Dubai, Miami of the United States, El Salvador, Malta and Zug, Switzerland. However, given that the encryption industry has grown up with little regulation, many in the industry are waiting on the government's attempts to take regulatory measures.

Singapore's move in the cryptocurrency sector attracts companies from (Binance) to Gemini to operate in the country. After Singapore's payment Services Act came into effect in January 2020, the total number of companies seeking business licenses under the Act has reached about 400, and about 170 companies have applied for payment service licenses.

However, only three encryption companies obtained the licence, two were rejected and about 30 withdrew their applications after contacting regulators. The brokerage subsidiary of DBS Bank, Singapore's largest bank, which is also a pioneer in building a digital token trading platform and providing tokenization services, has also been licensed.

Ravi Menon said regulators were taking the time to evaluate applicants to ensure they met the agency's stringent requirements. He also said that MAS has added resources to deal with a large number of potential cryptographic service operators. "We don't need 160 companies here [to operate encryption business], half of them can do that. But if there is a very high standard, I think this is a better result. "

In addition, he believes that the benefits of having a well-regulated local encryption industry can be extended beyond the financial industry. "if the encryption economy takes off in some way, we want to be one of the major players. It can help create jobs and create added value, which may also benefit other sectors of the economy in addition to the financial sector. "