Singapore To Grant First Crypto Licence in Bid To Lure Digital Asset Groups
By Crypto Global News
Singapore is set to grant formal regulatory approval to a cryptocurrency exchange for the first time as the Asian city-state steps up its challenge to rival Hong Kong as a digital finance hub.
Australian exchange Independent Reserve has garnered approval “in principle” from the Monetary Authority of Singapore allowing it to operate as a regulated provider of digital payment token services after applying for a licence in April last year.
The company is the first such provider to be awarded the approval from Singapore’s regulator of about 170 applicants, including global exchanges Binance and Gemini. Some groups, including Binance, have already been given an exemption to provide services to retail and institutional investors in the city while they await a formal licence.
“We have been waiting more than a year for this day,” said one foreign crypto exchange that operates in the city. “Now everyone is wondering who will get approval next.”
Global cryptocurrency groups have been expanding rapidly in Singapore thanks to the city’s friendly regulatory environment, which contrasts sharply with other markets that have taken a tougher approach to the industry.
Regulations vary widely between jurisdictions, meaning that several large global exchanges are seeking licences in various countries as watchdogs begin more closely scrutinising their operations.
Singapore’s resource-poor economy is heavily reliant on financial services and the city’s appeal as a business hub has increased as Hong Kong, a competing Asian financial centre, has been perceived as less attractive under a national security law.
The digital asset industry has emerged as another front in the rival cities’ competition.
‘All eyes on Singapore’
As in mainland China, Hong Kong has taken a stricter stance on the freewheeling cryptocurrency industry. The city is set to limit crypto trading to accredited or institutional investors under a new law.
Singapore, meanwhile, has made it easier for foreign crypto groups to establish offices and serve residents and businesses, albeit with restrictions including limits on transaction volumes. It introduced a payments law in January 2020 under which companies could apply for a licence. About 90 digital asset companies applied and are operating under an exemption.
On Monday night, Independent Reserve, founded in 2013, was given approval to operate, sending ripples of excitement through the industry in anticipation of more go-aheads to come. The company has 200,000 customers across Singapore, Australia and New Zealand.
“All eyes are on Singapore and their regulatory regime,” said Raks Sondhi, Independent Reserve’s Singapore-based managing director.
The MAS wants to establish the city-state as a global hub for the blockchain ecosystem and the “long process” to get the licence was due to the regulator’s focus on ensuring consumer protections and anti-money laundering measures, he added.
These included implementing the “travel rule”, which requires crypto companies to share personally identifiable information for transactions over a certain value. All successful applicants in Singapore need to implement the rule, per MAS guidance.
Eric Anziani, chief operating officer of Crypto. com, a digital currency exchange platform that has a large presence in Hong Kong but is growing quickly in Singapore, said that the geopolitical risk in Hong Kong had escalated. “Singapore is also more favourable to retail investors,” he said. “I think there are now more opportunities there in terms of talent as well.”
The head of another global exchange in the city-state said the “China overhang” had made Hong Kong less enticing as a crypto destination, especially for custodian services. “A lot of our customers were worried Chinese officials could come across and take their assets sitting in offline vaults.” – Copyright The Financial Times Limited 2021.
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