Singapore As A Hub For Digital Assets

State Regulation

Singapore’s Monetary Authority (MAS) has taken a balanced stance on digital assets to encourage domestic innovation in digital assets and blockchain and to attract crypto companies from abroad. According to Hubbis, a Hong Kong provider of education and communication between Asian wealth management communities, Singapore has built its reputation as a global innovation hub. This fact could help other nations develop their own digital asset laws.

The Payment Services Act (PSA) came into force in January 2020 to regulate both traditional and cryptocurrency payments and exchanges. The PSA was introduced to streamline payment services through uniform legislation and to create a framework for obtaining licences for operating cryptocurrency trades in the region. Under the leadership of MAS, Singapore has created a framework that addresses the problems, complexity, and licencing requirements of companies seeking to build a business with digital assets. The framework uses risk-based approaches to adapt regulations to the different risks arising from the different classes of digital assets. The result is an ecosystem that is simple, secure, and easily accessible, designed to protect and facilitate investments in digital assets and their participants.

Growing Interest in Cryptocurrencies

So far, more than 170 applications have been submitted to MAS, including those from the cryptocurrency exchanges Coinbase, Binance, and Gemini. The requirements for receiving applications were high. This is why MAS initially approved licences for institutional market participants who could operate in accordance with their strict compliance standards. One of them was the brokerage arm of DBS Bank, the largest bank in Southeast Asia in terms of managed assets. The MAS gave them a licence, which allowed them to set up a platform for trading digital tokens that includes storage and tokenization services. By the end of 2021, the bank has already included 600 institutional investors and participants on its stock exchange, and it expects this number to double in the near future. After that, it plans to increase this figure by 20–30 percent per year over the next three years. Hubbis representatives noted that regulation was the last barrier for many companies seeking to capitalise on the rapid growth of this sector.

Singapore already has many advantages that make it an ideal global hub for digital asset innovation. It has a strong supply chain of professional service providers and is ideally positioned to take advantage of the connections between Southeast Asia, India, and the West. Singapore’s dynamic start-up scene, which has been a support for the traditional financial sector, will also play a significant role in promoting the country’s digital asset sector in the future. As the acceptance of digital assets increases, Singapore’s ongoing growth as a digital asset hub is expected to significantly increase its importance in the financial market.