Singapore seeks to be well-positioned for crypto economy

Singapore is seeking to cement itself as a key player for cryptocurrency-related businesses by putting in place “strong regulation” to allow firms that meet their requirements and address the risks can continue to operate.

Ravi Menon, managing director of the Monetary Authority of Singapore (MAS), said getting into cryptocurrencies risks Singapore being left behind and that getting early gives them a head start.

He emphasized that the best approach is not to clamp down or ban cryptocurrencies and to understand their potential benefits as well as their risks.

Menon acknowledged that crypto is an investment in a prospective future, which is not clear at this point, and that financial institutions will face challenges with the decentralization of finance.

He added that they must raise safeguards in countering risks, including illicit flows.

Nations differ vastly on how to handle cryptocurrencies with China cracking down on large amounts of activities, Japan recently allowing dedicated crypto investment funds, and El Salvador embracing Bitcoin as legal tender.

Singapore wants to develop crypto technology, understand blockchain and smart contracts, and prepare for a Web 3.0 world.

Singapore’s approach has attracted crypto firms to set up a base from Binance Holdings Ltd. to Gemini.

Around 170 companies applied for a MAS license to push the total number of firms seeking to operate under its Payment Services Act to about 400.

Menon said a well-regulated local cryptocurrency industry could extend benefits beyond the financial sector, help create jobs, create value-add.

Singapore wants to be well-positioned for 2030 when “an economy of tokenization” develops, and that they want to be among the leading players when a crypto economy takes off.