Singapore could become a leader in the global cryptocurrency economy.
“If and when a crypto economy takes off in a way, we want to be one of the leading players,” said Ravi Menon, the Managing Director of the Monetary Authority of Singapore (MAS), in an interview with Bloomberg.com in anticipation of next week’s Singapore FinTech Festival.
“It could help create jobs, create value-add, and I think more than the financial sector, the other sectors of the economy will potentially gain,” Mr Menon said.
According to Mr Menon, the only way forward is a careful investment into the world of cryptocurrency. “We think the best approach is not to clamp down or ban these things,” he said.
This statement is another endorsement of digital currency in the Republic. Last week, Senior Minister Tharman Shanmugaratnam, Chairman of MAS, remarked on cryptocurrency’s future and functionality in Singapore.
Singapore’s role in crypto
Similar to Mr Tharman, Mr Menon sees the benefits of building a bustling and well-regulated crypto hub in Singapore where it could extend beyond the financial sector.
“With crypto-based activities, it is basically an investment in a prospective future, the shape of which is not clear at this point,” said Mr Menon.
Singapore has been attracting the likes of large crypto firms such as Binance Holdings and Gemini, even though some firms had faced run-ins with regulators worldwide.
There is a growing space for crypto services in Singapore, as seen by the 170 companies that applied for the MAS licence, taking the total number of firms to operate under its Payment Services Act to about 400 after the law came into effect in January last year.
The Payment Services Act is the city state’s way to formalise cryptocurrency payment services. This way, the Singapore government is granted greater oversight and control over activities.
As licensed entities, customers are assured of the central bank’s purview over the companies’ operations, making it a better safeguard for users. The central bank is likely to take any company to task if it is not compliant with any regulatory standards.
Strict requirements from MAS
Still, Singapore is taking a careful, calculated approach towards crypto firms.
Currently, only three crypto firms have received the much-coveted licences, while two were rejected.
About 30 withdrew their application after engaging with the regulator. Among those approved is the brokerage arm of DBS Group Holdings, Singapore’s largest bank, which is also a pioneer in setting up a platform for trading digital tokens while offering tokenisation services.
Just like Mr Tharman, Mr Menon cites one of the major concerns of cryptocurrency is its security risks and potential for “illicit flows”.
“But not to get into this game, I think, risks Singapore being left behind. Getting early into that game means we can have a head start and better understand its potential benefits as well as its risks,” Mr Menon said.
That is as Singapore is “interested in developing crypto technology, understanding blockchain, smart contracts, and preparing ourselves for a Web 3.0 world,” he said, referring to the third generation of online services.
The future of crypto firms in Singapore
The stringent requirements from the regulator are necessary to build a better crypto hub in Singapore.
The MAS has also boosted resources to cope with high volumes of prospective services operators.
Singapore follows in a list of countries or cities embracing cryptocurrency. Locations as diverse as Dubai, Miami, El Salvador, Malta and Zug, Switzerland, are also making efforts.
“We don’t need 160 of them to set up shop here. Half of them can do so, but with very high standards, that I think is a better outcome,” he said.
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