The rise and fall of Factbox-Singapore as Asia’s Cryptocurrency Hub

HONG KONG / SINGAPORE: Singapore’s booming cryptocurrency sector has been shaken by the recent collapse of Three Arrows Capital, a cryptocurrency hedge fund, and signs of tighter control by regulators. Monetary Authority of Singapore.

Below are key facts about Singapore’s emergence as an Asian cryptocurrency hub and the content of the Three Arrows collapse.

HOW IMPORTANT IS SINGAPORE FOR THE ASIAN CRYPTO SECTOR?

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Investment in Singapore’s crypto and blockchain companies rose to $ 1.48 billion in 2021, according to KPMG, ten times the previous year and nearly half of the Asia-Pacific total for 2021.

PwC claims that 6% of global cryptocurrencies are based in Singapore, which ranks third in the world – along with Switzerland and Hong Kong – behind the United States and the United Kingdom.

Singapore, one of Asia’s leading centers for investment banking and asset management, along with Hong Kong, wants to establish a leading role in technologies including blockchain and crypto.

WHY DID SINGAPORE ATTRACT CRYPTO COMPANIES?

The scope and reach of Singapore’s crypto companies and service providers have digital asset firms fleeing regulatory cuts elsewhere.

These include Huobi, a cryptocurrency exchange that originally focused on China and now has a large presence in Singapore.

US companies such as the crypto exchange Gemini have established a regional headquarters for Asia in Singapore.

The city-state was a forerunner in the development of a licensing system for cryptocurrencies, which also gave many companies the hope that approval from a top regulator would help them generate revenue.

Other industry leaders such as the cryptocurrency exchange Coinbase have applied for licenses in Singapore.

DBS, Singapore’s largest bank, has launched its own crypto exchange.

WHY TOTAL 3AC?

Digital currencies have been in decline for several months, with Bitcoin having lost about half of its value since early May.

The sale was triggered by the collapse of stablecoin TerraUSD and its paired token Luna, resulting in significant losses for holders like 3AC. The company lost about $ 200 million of its investment in Luna, a director told The Wall Street Journal last month, adding that the company was still trying to quantify its losses.

According to U.S. legal documents, several of 3AC’s lenders issued notices of default to it.

WHAT IS SINGAPORE’S REGULATORY POSITION?

Opinions of the Monetary Authority of Singapore indicated a welcoming approach, encouraging crypto-related services https://www.mas.gov.sg/news/speeches/2022/mas-approach-to-the-crypto-ecosystem.

At the same time, some companies say that the sometimes reassuring rhetoric from the authorities contradicts a harsh regulatory stance.

Only a handful of approvals have been granted so far among more than 100 applicants for new crypto payment licenses.

Chia Hock Lai, co-chair of the Blockchain Association Singapore, said there are currently more than 200 crypto companies in Singapore, but more closed or relocated after the licensing scheme went into effect.

The most prominent of these is Binance, the world’s largest cryptocurrency exchange, which left Singapore last year amid worldwide surveys.

Like regulators elsewhere, MAS has also indicated that it will take a strong stance on money laundering, consumer protection and other risks that may be associated with the digital currency industry.

Tharman Shanmugaratnam, chief minister and chairman of MAS, told parliament last week that the regulator was considering additional consumer protection for cryptocurrency trading, although he did not mention 3AC.

(Reporting by Alun John and Chen Lin; Editing by Edmund Klamann)

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