Regulators Can Look to Singapore as Role Model for Crypto Regulation

Singapore has been a global leader in the face of cryptocurrency and blockchain adoption, with some countries following their lead on crypto regulation. Other nations have taken a more hands-off approach to digital currency, which may be wise given it’s still an emerging market

Singapore is a place that has been at the forefront of cryptocurrency regulation. The country’s regulators can look to Singapore as a role model for crypto regulation.

 

Broctagon’s CEO, Don Guo.

Asia has established itself as a worldwide crypto leader, with nations such as South Korea, China, and Japan all being early users of blockchain technology. Singapore, a Southeast Asian island-state, is well-known for its significant fintech boom as well as its crypto-friendly mindset and structure. According to the Singapore Fintech Report 2021, fintech investment in Singapore reached US$346 million in 2020, accounting for 6.2 percent of total fintech investment in Asia.

Various other worldwide cryptocurrency organizations are increasing their presence in Singapore due to the country’s supportive regulatory climate in regards to financial markets, fintech, and blockchain within it. Temasek, a government-backed investment firm, has poured hundreds of millions of dollars into the industry. It was also the first Asian organization to join the Libra Association as a partner. The Monetary Authority of Singapore (MAS), the country’s major financial regulatory agency, has made it simpler for foreign crypto companies to set up shop and serve Singaporeans, however with conditions such as transaction limitations.

What Singapore has going for it is a clear understanding of how it interacts with bitcoin and the digital asset markets.

Take, for example, Binance, the world’s largest cryptocurrency exchange. Watchdogs from all over the world have been cracking down on Binance, including a warning from the UK’s financial regulators. The move was hailed as the country’s Financial Conduct Authority (FCA) sending a strong signal highlighting its concerns about the risks of investing in cryptocurrencies in general. Perhaps echoing similar worries, Singapore has issued an Investor Alert for Binance, informing customers that the company is not regulated nor registered to conduct payment services in the nation.

Singapore has made tremendous progress in developing regulatory standards for the cryptocurrency business, as it continues to emphasize the need of due diligence. The government is considering granting licenses to digital payment service providers, which would be a significant step forward for cryptocurrencies and solidify the country’s status as a prominent crypto-financial center.

This is just the top of the iceberg. Because to Singapore’s progressive policies, the crypto business has a plethora of prospects. While some crypto firms continue to raise funds, the country’s established financial institutions are taking small but steady moves towards crypto.

For example, as digital tokens gain acceptability, Singapore’s biggest bank, DBS, intends to quadruple the number of users on its new cryptocurrency trading platform to 1,000 by the end of December and expand this by 20-30 percent yearly for the following three years. Corporate investors, accredited individuals, and investment organizations that handle the assets of affluent families have already shown strong interest in the bank.

Regulators often resort to current compliance mechanisms to develop a regulatory framework for crypto, regardless of their geographical location. These proposed laws, although varying in breadth and degree, adhere to common financial criteria such as Know Your Customer (KYC) and Anti-Money Laundering (AML) (AML). In this sense, crypto is moving toward more standardisation and, eventually, a uniform design on which all exchanges/brokers would function, whether technically or operationally, indicating its maturity.

While regulatory rules do have a short-term influence on market sentiment, these external concerns, such as government laws, prohibitions, and investor confidence difficulties, are likely to be resolved in the long run. It goes without saying that authorities will have to put in a lot of effort to keep the crypto markets steady while everything is going on. It’s nearly a foregone conclusion that we’ll get there once investors’ faith has been restored.

Liquidity constraints

While it is a problem that affects the whole business, the lack of liquidity in the cryptocurrency markets is the most pressing issue that the younger crypto exchanges in Asia and across the world face. Many crypto exchanges struggle to balance the advantages of market-makers with the latter’s opaque pricing structures due to the significant expenses involved with securing such liquidity.

These exchanges are likewise experiencing growth pains, such as a limited number of users, poor transaction volumes, significant pricing discrepancy, and high user settlement fees. Building an order book that can compete with the leading exchanges demands a significant amount of cash and effort. That’s why Broctagon Fintech Group, based in Singapore, established the WorldBook, an industry-led inter-exchange liquidity network for digital assets that enables all linked exchanges to access a single global orderbook. The WorldBook effort primes the maturation of crypto as an asset class by drawing inspiration from the existing infrastructure of inter-bank liquidity.

The conventional finance sector is a great illustration of how crypto may apply comparable standards in its marketplaces because of its strong regulatory framework. What the crypto market is experiencing right now, particularly the liquidity issue, is something that the FX markets have previously dealt with and mastered. Cryptocurrency offers the advantage of being able to see how conventional money has worked. Due to past experience and technological advancements, the implementation of change and its outcomes in the crypto sector will be considerably quicker than in the FX area.

Singapore, as Asia’s premier fintech centre, is ideally positioned to lead the globe in resolving these difficulties, boosting investor trust, and promoting wider usage of cryptocurrencies. With progressive laws defining the country’s financial and monetary system, the island nation’s adept balance of regulation and freedom is quite likely to set the tone for crypto-regulation in the future.

The “regulated crypto exchanges singapore” is a role model for other countries that are looking to regulate cryptocurrencies. Singapore has been able to effectively curb the use of Bitcoin and other cryptocurrencies by imposing strict regulations on cryptocurrency exchanges.

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