Crypto companies in Singapore to face more heat as it tightens rules and seeks more control

• Crypto firms around the world have seen Singapore as a favourable destination for doing business.
• Singapore passed the Financial Services and Markets bill earlier this month that provides special powers to the regulator around crypto.
• Dubai could benefit from such a move.

The cryptocurrency industry may lose one of its favourite destinations. Singapore, which is a favourite for such firms along with Dubai, Wyoming, and more, has passed a legislation called the Financial Services and Markets Bill, which requires crypto firms based in the country but exclusively serving companies overseas to obtain a special licence to do business.

The bill was passed earlier this month and will impact firms from India and other countries that have been incorporating in Singapore to escape regulatory hassles in their home countries. It could also set a precedent for other countries, allowing them to tax crypto firms based within their borders but earn profits in overseas markets.

To be sure, crypto service providers in Singapore are also regulated by the Monetary Authority of Singapore (MAS). However, the new law enhances the regulator’s power and allows it to look into services providers who are exclusively serving overseas markets.

It also shows that authorities in Singapore may not be willing to be as kind towards the crypto industry as in some other geographies."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/CFT requirements on them. "
Alive Tan, a board member at the MAS, said in Singapore’s Parliament, while passing the bill earlier this month.

The MAS itself had issued guidelines meant to “discourage” the public from investing in cryptocurrencies in January this year.

“MAS strongly encourages the development of blockchain technology and innovative application of crypto tokens in value-adding use cases. But the trading of cryptocurrencies is highly-risky and not suitable for the general public. DPT service providers should therefore not portray the trading of DPTs in a manner that trivialises the high risks of trading in DPTs, nor engage in marketing activities that target the general public,” said Loo Siew Yee, MAS Assistant Managing Director (Policy, Payments, and Financial Crime), at the time.

Tighter crypto norms: Singapore’s loss, Dubai’s gain

However, this could be a boon for Dubai, which has been setting itself up to become a haven for blockchain, web3, and cryptocurrency firms.

The Virtual Assets Regulatory Authority (VARA), set up by Dubai earlier this month, offers a way for web3 firms to operate as licensed operators within that state. The authority also has powers to regulate token issuance by crypto firms, audit such tokens, and look into other aspects of the industry.

SEE ALSO:
ITC acquires a 10% stake in this mom-and-child care brand as it looks to hop onto the D2C train
"If you want to remove encroachments, go to south Delhi, not target the poor in Jahangirpuri" : Dushyant Dave