Why Cryptocurrency Banking Could be Less Taxing in Singapore
Singapore continues to make groundbreaking moves in the cryptocurrency world. The country has been lauded as one of the most crypto-friendly environments despite the fact that the central government has not yet recognized cryptocurrencies as legal tender.
In a move that is likely to make the country more attractive to cryptocurrency companies, the country's financial regulator, the Monetary Authority of Singapore (MAS) expressed willingness to assist cryptocurrency firms to open bank accounts.
The MAS managing director, Ravi Menon believes that such a move will foster greater development in the fintech industry. Across the world, countries such as India and China have placed regulatory roadblocks between cryptocurrency firms and banks. This move makes it impossible for businesses operating in the cryptocurrency space.
Rise of Cryptos
Concerning new cryptocurrency entrants to the market, Menon remains firm which makes it harder for them to conduct financial transactions in the country. While Singapore is an ideal environment for cryptomarket growth, he was quick to note that the country is not totally lax on its regulations in a bid to attract new exchanges, adding that existing cryptocurrencies still have to adhere to the rules set out by the MAS.
Singapore has been a pioneer in the ever-expanding cryptocurrency world and currently ranks third in launching the most successful initial coin offerings (ICOs), after the US and Switzerland. Line Corporation, Japan’s largest communications platform, launched its crypto-exchange services in Singapore.
In addition, Tokenize Xchange, Singapore’s most prominent crypto exchange platform, hosted its premier ICO sale back in July with the promise of making access to tokens a more simplified process. Keen on capitalizing on its market growth world over the world, Binance started a closed beta testing of fiat-cryptocurrency exchange in September in Singapore. The cryptocurrency exchange did this after tapping markets such as Malta, Liechtenstein and South Korea.
But Singapore is not satisfied with simply trading in digital currencies, the country's aim is to lead the pack where cryptocurrencies are concerned. With its marked, unrivaled moves, the country surges ahead and has already produced Asia’s first prepaid Visa card.
Cryptocurrency firms in Singapore have long struggled with the tight regulations laid down by the MAS, which have hampered growth and led to lost revenue. The perpetuation of fraud and money laundering activities frightened banks into turning cryptocurrency firms away.
But for Menon, banks will have to find a way around these issues even though crypto businesses might be 'obscure and dangerous to investors.' Enabling firms to open bank accounts was just one way of bringing the two parties together and forcing them to speak and find a way to make it work.
John Hoelzer, founder and CEO of ONe Network says, "Singapore is already a hub to some degree for startups in the crypto sector. Having the official regulator help with assisting these companies in establishing a bank account is crucial to future success and proper regulation will be important as the banking sector in many areas of the world still seeks to take advantage of and discriminate against the current crypto companies. It is crucial for this to change and proper bridges be built to allow the country to maintain its status as a hub for these startups."
While banks will be able to provide services to crypto companies, Menon holds that they will have some level of discretion over which clients to work with. This means the banking industry may have to come up with its own set of rules to guide their interaction with cryptocurrency firms.
Most cryptocurrency exchanges have struggled with opening bank accounts because of regulatory lockouts. Legitimate bank accounts will mean legitimate businesses and will provide another safeguard against cyber attacks and breaches.
For investors, this represents a step into a future where digital coins rephased into a regularized environment with securities, tokens and digital coins being handled more securely. And with Singapore providing the much-needed respite to cryptocurrency exchanges, there is no doubt the country will attract more crypto-related business over a short period of time.
Disclaimer: David Drake is on the advisory board for most of the firms mentioned or quoted in this article.