Singapore has introduced a new law that intensifies regulatory scrutiny of cryptocurrency players based in the city state. The move comes less than three months after it banned advertising of crypto services to the general public.
The new Financial Services and Markets (FSM) Bill, passed on Tuesday (April 5), requires Singapore-based virtual asset service providers doing business outside of Singapore to be licensed in the city state. Until now, only crypto players operating in the market were under the purview of Singapore’s regulators.
Observers are divided on the impact that the greater regulation has on Singapore’s potential as a cryptocurrency hub.
Bybit co-founder and CEO, Ben Zhou, said that firms in this emerging sector would likely welcome the regulatory clarity, adding that regulation is an important consideration for crypto firms setting up new operations.
“We appreciate that it takes time and sometimes trial-and-error to establish a clear and innovation-friendly framework, and we are fully aware of the efforts that regulators are putting in,” Zhou told FinanceAsia.
Bybit was initially headquartered in Singapore, which was heralded as a pioneer in providing a regulatory framework for crypto firms. As such, it benefitted from a first-mover advantage that the location may no longer hold.
The company last week announced the relocation of its headquarters from Singapore to Dubai, following the latter’s introduction of a new Virtual Asset Regulation Law. The move suggests that young crypto firms remain adaptive to regulatory developments and open to the incentives provided by different jurisdictions to lure these players.
“Whilst Singapore was an early mover when it came to providing a crypto regulatory framework, crypto companies now have many options,” noted Henri Arslanian, senior advisor for PwC Hong Kong, speaking to FA.
“These include Dubai, which has a new crypto-specialised regulator, and a welcoming attitude, as well as the UK, which is looking to become a global crypto hub,” he added.
However, he warned that crypto firms should also consider factors other than regulatory approval, such as the ability to hire local and foreign talent, when deciding on a base.
DBS Vickers, which holds a digital payment token licence in Singapore, welcomed the new regulation, suggesting it would help further formalise the sector:
“As Singapore grows in stature as a global hub for digital assets, it is imperative that clear guardrails are established to encourage sustainable growth in the digital asset industry,” a spokesperson for DBS Vickers told FA.
“We believe that enhancements to the regulatory landscape will help promote investor confidence and strengthen the foundation for a robust and credible digital asset industry in Singapore,” the spokesperson added.
Speaking to parliament on Monday, Monetary Authority of Singapore (MAS) board member, Alvin Tan, explained the rationale behind the new rules:
“We could be exposed to reputational risks brought by digital token service providers created in Singapore, and which provide services relating to virtual assets such as Bitcoin outside Singapore…The FSM Bill seeks to mitigate such risks by licensing these players and imposing AML (anti-money laundering)/CFT (counter-terrorism financing) requirements on them.”
