Cryptocurrency consumer protection law At the end of 2021 — a year in which Bitcoin (BTC) and Ether (ETH) rose 100% and 300%, respectively — global crypto rating company Coincub ranked Singapore as the most crypto-friendly country in the world due to its “robust economy, positive legislative environment, and high rate of cryptocurrency adoption.”
During mid-January, Singapore’s MAS enacted consumer protection laws for investors exposed to constant reminders of digital assets via billboard ads or crypto ATMs, banning all cryptocurrency-related advertisements and ATMs in public spaces.
Singapore’s regulators have done a great deal to nurture the blockchain industry. Its No. 1 ranking by Coincub was proven right by the prompt regulatory measures implemented by the Monetary Authority of Singapore (MAS), the country’s main financial regulatory body, when the cryptocurrency market began crashing during January 2022 and entered bear market territory.
Related: Clampdown on crypto ads: A one-off or a new phase of global regulation?
In a statement, MAS said that while it “strongly encourages” blockchain technology development and innovative crypto use cases, cryptocurrency trading is “highly risky and not suitable for the general public.” As such, cryptocurrencies should not be portrayed “in a manner that trivialises the high risks of trading” them.
Payment Services Act, January 2020
In January 2020, Singapore’s Payment Services Act came into effect as a response to the Financial Action Task Force’s 2018 update to its Anti-Money Laundering (AML) and Combatting the Financing of Terrorism (CFT) cross-border risk guidelines for cryptocurrencies. The Payment Services Act is a flexible framework for the regulation of payment systems and payment service providers in Singapore that establishes registration requirements along with AML and CFT guidelines for cryptocurrency businesses.
Initial coin offerings
MAS has been selective in issuing licenses to cryptocurrency businesses, with a large number of applicants failing to receive licenses to operate in the country. DBS Bank — Singapore’s largest bank — as well as OCBC Bank, IBM and two institutional-grade Bitcoin funds launched by Singapore-based fund manager Fintonia Group are among those that received licenses to operate.
In response to a wave of initial coin offering launches, MAS first published guidelines in August 2017 indicating that if an ICO was deemed to be issuing a security, it would be subject to regulation. This was followed by MAS issuing “A Guide to Digital Token Offerings,” which provides further explanation and direction on the regulation of cryptocurrencies in Singapore.
Taxation of cryptocurrencies
Singapore is a low-tax jurisdiction. According to Desmon Teo and Lee Vin Wee of Big Four accounting firm Ernst & Young, the Inland Revenue Authority of Singapore exempted digital payment tokens from goods and services tax effective Jan. 1, 2020. Since there are no capital gains taxes in Singapore, capital gains derived from the sale of cryptocurrencies are not taxable either.
Related: The major tax myths about cryptocurrency debunked
Blockchain adoption
Singapore, which is a major financial center and shipping hub and has the tenth-highest GDP per capita, has emerged in a short period as a global cryptocurrency hub amid its favorable regulatory and tax infrastructure and by utilizing blockchain technology in many areas of its economy. MAS is bullish on the potential of crypto and blockchain, particularly in expediting cross-border payments and trade finance, but frowns on cryptocurrencies as investment assets for retail investors.
According to one survey, 43% of Singaporeans own cryptocurrency. In comparison, the overall crypto ownership rate is 11.3% in South Africa, 10.5% in the United States and 9.8% in Sweden.
Cryptocurrency exchanges
Huobi, the world’s sixth-largest crypto exchange, also announced it would be shutting accounts in Singapore by the end of March 2022. SIX Digital Exchange — a sister company of SIX Swiss Exchange, which operates Switzerland’s national stock exchange — announced a partnership with SBI Digital Asset Holdings, a division of Japanese banking and financial services giant SBI Group, to establish a crypto exchange and central securities depository in Singapore. The joint venture, called Asia Digital Exchange, is designed to create a regulated, global liquidity pool for digital assets between Asia and Europe.
Retail investors can trade cryptocurrencies on a multitude of crypto exchanges, including Coinbase, Kraken, FTX, Bybit, KuCoin, Vauld, Independent Reserve, Gemini, Coinhako, Tiger Brokers, Futu’s Moomoo and Syfe. Binance, the world’s largest crypto exchange, acquired an 18% stake in the Singapore-regulated private securities exchange Hg Exchange before announcing it would discontinue its operations at Binance Singapore by mid-February 2022. This announcement was followed by a special report by Reuters detailing Binance’s opaque corporate structure coupled with weak global AML and CFT compliance.
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