Is Singapore on the way to embracing cryptocurrency as part of the financial system?

Photo: Nicolas Lannuzel/CC BY-SA 2.0

While cryptocurrencies are yet to be exchange-registered, they are already a part of the payment landscape. But will Singapore fully implement digital currencies as a payment option?

By Sangeeta Deogawanka

The digital currency that has swept across the globe in the last few years cannot be ignored any longer. The recent success of Singapore’s “Token Day” to mark the 10-year anniversary of cryptocurrency, showed the potential for crypto adoption across the island-nation. Thirty retailers around Singapore’s Chinatown accepted cryptocurrency as payment for a 19-day period, leading to increased discussion over the emergence of cryptocurrencies as an alternative currency in the payments space.

Singapore was an early arrival to cryptocurrency regulation

Singapore was one of the first countries to start regulating the usage of digital currencies in 2014 by imposing taxation on earnings. But prior to November 2018, the focus was on crypto earnings rather than the underlying technology.

In late November. Singapore’s central bank finalised its regulatory framework to safeguard cryptocurrencies against counter-terrorism financing, and bolster cybersecurity. Under the new payment services bill (PSB) the Monetary Authority of Singapore (MAS) will require crypto payment service providers to be licensed, but prior to this landmark legislation, crypto exchanges were an unregulated industry.

Singapore is nurturing an ecosystem friendly to cryptocurrencies

Singapore is known for its large-scale support of crypto-related technologies and fintech innovation. The PSB has laid the foundations for incorporating blockchain into the securities framework and payment systems. This has further fast-tracked blockchain based partnerships and investments that ultimately further the cause of the cryptocurrency asset class.

Interestingly, unlike other countries where blockchain adoption came after cryptocurrency; in Singapore, initial coin offerings (ICOs) set the trend, followed by blockchain.

Singapore witnessed a swell in ICOs offering digital coins instead of shares.

Can crypto become legal tender in Singapore?

Cryptocurrency cannot exist without the underpinning blockchain technology. With massive investments pouring into blockchain technology, cryptocurrencies are here to stay.

The MAS released a retail investor’s guide to digital assets in May. Previously, few governments have been willing to encourage retail investments into cryptocurrency, including the Singaporean government, due to their volatility and lack of regulation. This is one sign that the government in Singapore is preparing for cryptocurrency’s entry into mainstream payment solutions.

The foundations have already been laid, with taxation guidelines for crypto earnings, and the provision for crypto to be treated as digital assets in the new PSB.

Singapore’s central bank has also announced it is broadening its regulatory regime for payment providers to bring certain cryptocurrencies under its jurisdiction, with the new legislation due to come into force by the end of 2019. Cryptocurrency service providers are expected to be licensed under the new regulatory framework.

As a series of high-profile partnerships fuel blockchain innovation, the implementation of crypto as a payment option is no longer a matter of “if” but “when”.

The adoption of cryptocurrencies as tender would bring global crypto exchanges to Singapore’s shores

Already, the surge of newly-minted crypto millionaires in the financial capital of ASEAN has attracted global crypto exchanges to set shop in Singapore and the expansion of innovative crypto-based ventures.

Wider adoption of cryptocurrencies would also boost employment in Singapore. According to the recruitment firm, Robert Walters, there has been a 50% increase in job roles related to blockchain or cryptocurrencies in Asia since 2017, with Singapore being one of the main labour markets. These job opportunities would surge in a society where crypto payments were widely accepted payment solutions.

With Singapore’s establishment as the fintech capital of Asia, and the landscape becoming increasingly favourable for cryptocurrencies, Singapore can expect to see a huge inflow of funds into crypto and blockchain technologies.

With most countries across the world yet to take a stand on the legal aspect of crypto, Singapore’s fast-tracking of cryptocurrency regulation will result in tangible economic benefits across the island nation. An influx of cryptocurrency exchanges rushing to register in Singapore is likely to make it the crypto capital and blockchain