Singapore and Cryptocurrencies

Singapore is slowly emerging as a key hub for blockchain startups wanting to launch an Initial Coin Offering (ICO). The city-state of Singapore has always been a dream destination due to its tax-friendly regulations (income tax ranging from 0 percent to a max of 20 percent), ease of establishing a company, light-touch rules, and state funding. The state has over 200 banks and has already hosted many successful ICOs in the past.

The Monetary Authority of Singapore (MAS), Singapore’s central bank, has been a propone t of fintech. It allocated S$225 million ($166 million USD) to develop Fintech projects and applications. MAS also created a tokenized version of the Singapore dollar, available on an Ethereum-based blockchain. The move, called Project Ubin, is a move towards creating a functional alternative for Singapore’s interbank payments network through tokenization and blockchain technology. Bank of Canada, Bank of England, and People’s Bank of China also experimented with tokening their national currencies on the blockchain. But this is the first time a central bank successfully rolled out such a tokenization.

The lack of regulatory clarity around token sales in Singapore has left participants concerned about their legality. MAS issued a notice in 2014 that said virtual currencies were not per se regulated but that intermediaries in virtual currencies would be regulated for illegal activity such as money laundering.  In a statement issued last month, MAS said it “…has observed that the function of digital tokens has evolved beyond just being a virtual currency. For example, digital tokens may represent ownership or a security interest over an issuer’s assets or property.”

MAS wants more people to participate using virtual currencies and is hence protecting ICO activities by enforcing regulations. The MAS also wants to maintain the reputation of Singapore as a financial hub and prevent money laundering.