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Here’s Why Singapore Unable To Find The Right Balance For Cryptocurrencies

Singapore wants to become a leading player in the blockchain space, at the same time, want to heavily regulate crypto trading platforms.

Here’s Why Singapore Unable To Find The Right Balance For Cryptocurrencies

Singapore authorities are having a hard time regulating the cryptocurrency market in the country. On one hand, they want to become a leading player in the blockchain segment, and on the other, they want to heavily regulate the operations of crypto trading platforms. This conflict can severely hamper the growth prospects of the crypto economy in the region.

In January of 2022, the Monetary Authority of Singapore (MAS) banned all cryptocurrency advertisements across the country. MAS declared that trading of high-risk products will not be openly advertised, and they also asked influencers to not promote such products. This is in sharp contrast to last November when the managing director of MAS had proclaimed that Singapore will be interested in creating a robust crypto market in the near future.

It isn’t only the earlier declaration from MAS that makes this move seem quite unexpected. Singapore had legitimised cryptocurrency-based transactions in 2020, and in 2021 there was a total of $1.48 billion worth of investments in the country’s blockchain and crypto segment. But now, the boards across Singapore that carried flashy banners from crypto trading companies lie barren. MAS is also including further restrictions such as a cap on how many transactions each crypto investor can perform, etc.

However, MAS still claims that they want to develop a blockchain segment and that cryptocurrencies will have a place within it. They are also planning to create a digital currency for the country that will be operable across all sectors.

But, when it comes to trading cryptocurrencies on private platforms, the authorities don’t seem to trust the process. Only 4 crypto trading platforms currently have a full license to carry on their services, while another 4 will most likely be cleared soon. Compared to the 180 companies that applied for the license, this is a small volume.

At the same time, MAS has allowed investing groups and professional investors to deal in the cryptocurrency trade. So, it would be wrong to state that Singapore is completely against cryptocurrency trading. Rather, they want to regulate it in their own unique way. But, this is harmful to the overall industry and the signs are showing.

The Future According To MAS

What MAS seems to not have any issues with is the Blockchain side of things. The regulatory body welcomes all forms of innovations in blockchain technology and also plans to incorporate it for commercial purposes. Various projects and banks such as Ubin, Dunbar, Partior, etc. have been initiated to produce user-case instances of Blockchain technology.

But when it comes to cryptocurrencies, Singapore’s authorities are not too easy going on products that are highly volatile and can be used for disruptive purposes. Especially after the regional crypto exchange Bitget was involved in a controversy, MAS decided to close doors on all crypto trading platforms, barring only a few. 

MAS claims that there is also a lot of misinformation regarding crypto trading on the internet. They point to certain message boards that provide unregulated advisory to crypto traders which could be harmful. And people have indeed lost a lot of money while investing in crypto, but MAS had already given these trading platforms the green light, hence people invested in them. Now, they are banning the platforms from operating to full capability, and also plan to raise public awareness regarding such investments.

What MAS seems to really want to do is create an institutional ecosystem around crypto and continue blockchain-based innovation. The retail platforms don’t seem to have a place in this market. While trading institutions are a major part of the global crypto trading market, the unavailability of the retail segment altogether does not make Singapore a potential crypto hub anymore. 

Is The Market Shifting Geography?

Asia was being looked to as one of the areas with maximum potential for a crypto market. But, after China and India, the two biggest countries, banned crypto trading altogether; and now Singapore is following closely, the global movement of cryptocurrencies is surely to make a major shift. Many global digital currency trading platforms are now withdrawing from Singapore. 

Binance, one of the biggest cryptocurrency platforms has already taken its exit, and more are likely to follow. As of now, only DBS, TripleA, FOMO Pay, and Independent Reserve are allowed to operate fully. Maybe more such companies will be allowed to operate in the future, but the process is still going to be a tedious one.  

Analysts also point to the fact that the crypto market can potentially succeed even without retail action. Singapore’s retail market is much smaller compared to western countries, and the country’s primary investors are the institutions that deal in the segment. Not being able to advertise does not affect the investments from institutions or from experienced individuals. So, if the trading platforms are able to pass the paperwork stage and start their business, they are likely to receive transactions from these dedicated investors.

Retail investors can also partake in crypto trading, however, there will definitely be a dip in the market share. Many retail investors are looking to diversify their portfolios and add a few crypto investments. The upper economic class of Singapore is likely to be a decent-sized customer pool, and there are also advisory businesses that support this market.

It should be noted that the crypto segment in Singapore is still in its initial stages. So, a direct exit may not be the best move for these platforms, as the future can bring surprising changes. Once MAS has employed Blockchain innovations across segments, it may loosen the regulations on crypto trading platforms, and already present platforms can take advantage of the ecosystem.

MAS is set to create an ecosystem that supports innovation. Crypto platforms will have a lot of hurdles to cross and the process will not be easy. But, at the same time, they will be dealing in a market with very little competition. So, there are definitely prospects to look forward to, if the right steps are taken at the right time.

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