Singapore Taking Slow Approach to Crypto Adoption; Won’t Become an ‘Overnight Crypto Hub’

Singapore has been seen as a favorable crypto destination until the country’s regulator’s started tightening the rules around virtual assets. But, despite facing competition from regions like Dubai, the authorities have stated that they will “chart their own path” and not “react to what other countries are doing.”

Daniel Lee, former head of business and listing at DBS Digital Exchange, pointed out to the MAS that crypto businesses are fleeing the nation-state. Lee said, “You’ve now lost Binance and FTX to Dubai. We’ve lost 80% of global market share of the total market that’s gone over to the Middle East, and these people are being courted by France, Germany, and so on,”

In response, Monetary Authority of Singapore’s (MAS) Alvinder Singh said on Friday, “To think that we want to be a crypto hub like some countries that have oil and all that, overnight, no. That is not our objective at all. It is a medium-term objective, doing it responsibly, feeling our way around the sand,”

Singh, who leads MAS’ fintech ecosystem office, was speaking at the IDEG Institutional Digital Assets Summit, reported The Straits Times.

The official also stressed that crypto is the future of financial services, but he argued that it is not for retail investors.

Singapore prefers regulation for investor protection

In early January, MAS issued guidelines to discourage cryptocurrency trading by the general public.

“MAS has consistently warned that trading DPTs is highly risky and not suitable for the general public, as the prices of DPTs are subject to sharp speculative swings,” the regulator had noted.

Recently, one of the country’s largest lenders, DBS Bank, decided to halt its crypto trading offering for investors amid regulatory uncertainty. 

Regarding this, Singh said, “We know that a majority of our population here are not sophisticated enough to be able to synthesize all this information and make a correct, informed judgment.”

Adding that even some risky traditional asset classes fall under a similar category. But, Lee is of the view that fund managers can provide professional exposure to these retail customers. Lee remarked, “I would also think that… if retail investors cannot get into this space, they’ll become susceptible to scams. By cutting them off all those proper centralized exchanges… it becomes a lot more problematic.”

The executive also said that there can be clearer crypto rules to govern the domestic sector.

In April, the country’s new law provided for Singapore-based virtual asset service providers (VASPs) to be licensed even if they only carried out business overseas. This meant to all crypto businesses, domestic and foreign, to be regulated under anti-money laundering (AML) and counter-terrorism financing guidelines (CFT) of Singapore.

Dubai might be donning Asia’s crypto crown

Last year, Ravi Menon, Managing Director of MAS, revealed in an interview with Bloomberg that crypto is ‘disruptive’ and Singapore wishes to lead the tech revolution. He had remarked, “If and when a crypto economy takes off in a way, we want to be one of the leading players.”

But lately, Dubai has become a crucial crypto hub for both investors and creators. Apart from approving an initial virtual assets law, Dubai has also appointed the Dubai Virtual Assets Regulatory Authority as the supervisor for the sector.

Recently, Dubai-based crypto education platform Coinmarketpedia also announced that it has secured pre-seed funding of $2 million.

Meanwhile, UAE is also the third-largest crypto market in the Middle East, as per data compiled by Chainalysis last year.

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