Singapore’s ambition to be the global hub of crypto received a major boost when the nation’s parliament gave its consent to a law that aimed to bring foreign digital asset firms operating in the city-state under its ambit. According to sources, the new legislation will require overseas virtual asset service providers [VASPs] in the region to be licensed.
At present, such firms fall outside the purview of anti-money laundering and terror financing. The new law passed in the legislature on Tuesday is part of a broader effort to combat money laundering and other criminal activities. However, the move sends mixed signals.
This is because it comes at a time when Singapore’s financial regulator has recently prohibited firms in the cryptocurrency space from advertising their services to the public, which points to its cautious approach.
Apart from that, Singapore’s leading bank DBS Bank has made a complete reversal of its plan to extend crypto trading services to retail customers, a few days back. Many believed the decision was taken under regulatory pressure.
The rumors turned true when in an interview, Chief Executive Officer, Piyush Gupta said the local watchdogs were“rightfully concerned” about allowing digital asset services in the retail sector. Besides that, Singapore’s strict regulatory standards became a source of disillusionment for many in the industry.
Is Singapore’s crypto framework a “tall regulatory wall”?
Patrick Chiu, the founder of Hong Kong’s AP Capital, a fund with an expanding digital asset portfolio license said that the city-state has terms and stipulations that “aren’t typical for global exchanges.” “Everyone was welcome to apply”, said Chiu. “But there’s a tall regulatory wall”.
Even Binance who is the biggest player reportedly felt let down by the moves, as it had withdrawn its application for setting up its local affiliate.
Earlier this year, Singaporean regulators banned direct-to-consumer marketing for exchanges and directed crypto ATM operators to turn off their machines. It also placed DeFiance Capital, one of the larger crypto funds in the city-state, on an investor alert list because it was “wrongly perceived as being licensed or regulated by the Monetary Authority of Singapore.”
That said, the city-state has fared relatively well among its regional peers in welcoming the technologies of cryptocurrency and has launched a framework for legalizing the industry. In contrast to that, other Asian nations such as China have opted for a blanket ban.
