Factbox – Singapore’s rise, and falter, as Asia cryptocurrency hub
By Alun John and Chen Lin
HONG KONG/SINGAPORE (Reuters) – Singapore’s burgeoning cryptocurrency sector has been shaken by the current collapse of Three Arrows Capital, a cryptocurrency hedge fund, and indicators of tighter scrutiny by regulators on the Financial Authority of Singapore.
Following are key info in regards to the rise of Singapore as an Asian cryptocurrency hub, and the fallout from the Three Arrows collapse.
HOW IMPORTANT IS SINGAPORE TO ASIA’S CRYPTO SECTOR?
Funding in Singapore’s crypto and blockchain corporations surged to $1.48 billion in 2021, based on KPMG, ten instances the earlier 12 months and almost half the Asia Pacific complete for 2021.
PwC says 6% of the world’s crypto funds are primarily based in Singapore, rating it a joint third globally – together with Switzerland and Hong Kong – behind the U.S. and UK.
Singapore, considered one of Asia’s principal funding banking and asset administration centres alongside Hong Kong, is eager to ascertain a number one position in monetary expertise, together with blockchain and crypto.
WHY HAS SINGAPORE ATTRACTED CRYPTO BUSINESS?
The size and vary of Singapore’s crypto corporations and repair suppliers attracted digital asset corporations fleeing regulatory crackdowns elsewhere.
These embrace Huobi, a crypto alternate initially targeted on China that now has a significant presence in Singapore.
U.S. corporations like crypto alternate Gemini have arrange regional Asia headquarters in Singapore.
The citystate was additionally a forerunner in creating a licencing regime for crypto corporations, which attracted many corporations hoping the endorsement of a number one regulator would assist them to win enterprise.
Different trade leaders reminiscent of crypto alternate Coinbase have utilized for licences in Singapore.
DBS, Singapore’s largest financial institution, has launched its personal crypto alternate.
WHY DID 3AC COLLAPSE?
Digital currencies have been on the backfoot for months, with Bitcoin dropping roughly half its worth for the reason that begin of Could.
The sell-off was triggered by the collapse of stablecoin TerraUSD and its paired token Luna, leading to massive losses for holders reminiscent of 3AC. The corporate misplaced about $200 million of its funding in Luna, an govt advised the Wall Road Journal final month, including that the corporate was nonetheless attempting to quantify its losses.
Based on U.S. courtroom filings, a number of of 3AC’s lenders have issued it notices of default.
WHAT IS SINGAPORE’S REGULATORY STANCE?
The Financial Authority of Singapore’s statements have indicated a welcoming method, encouraging crypto-related providers https://www.mas.gov.sg/information/speeches/2022/mas-approach-to-the-crypto-ecosystem.
On the similar time, some corporations say the authorities’ soothing rhetoric belies an often harsh regulatory stance.
Solely a handful of approvals have been granted to date amongst properly over 100 candidates for brand spanking new crypto funds licences.
Chia Hock Lai, co-chairman, Blockchain Affiliation Singapore, mentioned there have been presently properly over 200 crypto companies in Singapore, however a number of had shut down or moved out after the licencing regime got here in.
Probably the most high-profile of those is Binance, the world’s largest crypto alternate, which left Singapore final 12 months because it got here below shut scrutiny all over the world.
Like regulators elsewhere, MAS has additionally indicated that it could take a troublesome stance on cash laundering, client safety, and different dangers that could be related to the digital forex sector.
Tharman Shanmugaratnam, Senior Minister and chairman of the MAS, advised parliament final week that the regulator was contemplating extra client safeguards for cryptocurrency buying and selling, though he didn’t point out 3AC.
(Reporting by Alun John and Chen Lin; Enhancing by Edmund Klamann)
