January 10, 2025
By Our Correspondent
Singapore has emerged as a frontrunner in the competition to establish itself as Asia’s digital asset hub, with the nation’s financial regulatory authority committing to maintain regulatory clarity to foster adoption.
In 2024, the Monetary Authority of Singapore (MAS) granted licenses to 13 virtual asset service providers (VASPs), which included exchanges such as Gemini, OKX, and South Korea’s Upbit, as well as liquidity provider GSR, crypto bank Anchorage, and custodian BitGo. In comparison, Hong Kong, a significant competitor to Singapore, issued fewer than half of these licenses, maintaining a more cautious stance.
The MAS has pledged to continue providing this regulatory clarity and to refine its framework “to address risks as they arise and to facilitate innovation as appropriate,” as stated by managing director Chia Der Jiun in a recent interview with Business Times.
As Singapore’s de facto central bank, the regulator has been adjusting its strategies in response to market developments. Initially, its focus was on combating crypto-related crimes such as money laundering, which led to the implementation of the Payment Services Act in 2019. Subsequently, the emphasis shifted towards consumer protection, including mandates for fund segregation.
Currently, the MAS is concentrating on stablecoins, as their use in payments and tokenization gains traction. This focus aligns with a global trend towards integrating stablecoins into national regulatory frameworks. For example, the European Union began implementing the stablecoin components of the Markets in Crypto-Assets (MiCA) framework in mid-2022.
“Clearly, they’ve been early movers in stablecoins. In terms of looking around APAC in a regulated market, Singapore is clearly the leader,” remarked John O’Loghlen, managing director for Coinbase in the Asia-Pacific region.
A distinguishing factor that differentiates Singapore from Hong Kong and other prominent Asian financial centers is its “risk-adjusted approach,” which benefits both retail and institutional investors, according to William Croisettier, whose company ZKcandy serves the on-chain gaming community.
He noted that Singapore facilitates interactions between new cryptocurrency enterprises and local banking institutions, a feature regarded as a luxury in many other regions globally.
Ben Charoenwong, an associate professor of finance at INSEAD, further emphasizes that Singapore’s regulatory framework promotes collaboration between newcomers and established financial entities.
David Rogers, the CEO of the cryptocurrency liquidity provider B2C2, agrees with this perspective. He stated to Bloomberg that the city-state’s strategy positions it as a “safe, long-term option for a regional hub.”
In recent years, tokenization has played a pivotal role in Singapore’s advancements in blockchain technology. The Monetary Authority of Singapore (MAS) has been leading research on tokenization through Project Guardian, which commenced in 2022. This initiative has united nearly 50 global organizations, including regulatory bodies such as the United Kingdom’s Financial Conduct Authority (FCA), the International Monetary Fund (IMF), and the Deutsche Bundesbank, alongside major financial institutions like JPMorgan, Moody’s, Fidelity, Citi, UBS, and Ant Group.
Nevertheless, caution remains essential for Singapore. The nation was the base for Three Arrows Capital (3AC), which was involved in one of the most significant failures in the cryptocurrency sector and played a crucial role in the 2022 crypto crisis that resulted in the loss of hundreds of billions of dollars. Additionally, during the collapse of FTX, Singaporeans were significantly impacted, with the city-state recording the second-highest number of FTX users after South Korea.