Singapore has pulled ahead of its rivals in the race to become Asia’s digital asset hub, and the country’s financial watchdog has pledged to continue offering regulatory clarity to promote adoption.
In 2024, the Monetary Authority of Singapore (MAS) issued licenses to 13 virtual asset service providers (VASPs), including exchanges Gemini, OKX, and South Korea’s Upbit, liquidity provider GSR, ‘crypto’ bank Anchorage, and custodian BitGo. In contrast, Hong Kong, one of Singapore’s biggest rival financial hubs, issued less than half this number as it continued being conservative.
The MAS will continue offering this clarity and refining its framework “to address risks as they arise and to facilitate innovation as appropriate,” stated managing director Chia Der Jiun in a recent interview with the local paper Business Times.
The regulator, Singapore’s de facto central bank, has been adapting its approach to market evolution. Initially, it focused on curbing ‘crypto’ crimes such as money laundering, implementing the Payment Services Act in 2019. It then evolved its approach to focus on consumer protection, including requiring fund segregation.
Its most recent focus has been stablecoins as payments and tokenization become more popular. This aligns with a broader global emphasis on bringing stablecoins into the purview of national regulators. The European Union, for instance, first implemented the stablecoin facets of the Markets in Crypto-Assets (MiCA) framework mid-last year.
“Clearly, they’ve been early movers in stablecoins. In terms of looking around APAC in a regulated market, Singapore is clearly the leader,” opines John O’Loghlen, the Coinbase managing director for the Asia-Pacific region.
One factor that has set Singapore apart from Hong Kong and other major Asian financial hubs is a “risk-adjusted approach” that favors both the retail and institutional players, says William Croisettier, whose ZKcandy caters to on-chain gamers.
“Singapore also makes it easy for new crypto firms to interact with local banking partners, a provision considered a luxury in other parts of the world,” he told one news outlet.
“Singapore’s framework encourages interaction between new entrants and established institutions,” adds Ben Charoenwong, an associate professor of finance at business school INSEAD.
David Rogers, the chief executive at ‘crypto’ liquidity provider B2C2, concurs. He told Bloomberg that the city-state’s approach makes it “a safe, long-term choice for a regional hub.”
Tokenization has been central to Singapore’s blockchain advancements in recent years. MAS has been spearheading research into tokenization for years under Project Guardian, which launched in 2022. Since then, the initiative has brought together nearly 50 global firms, ranging from policymakers like the United Kingdom’s Financial Conduct Authority (FCA), the International Monetary Fund (IMF), and the Deutsche Bundesbank to financial behemoths like JPMorgan (NASDAQ: JPM), Moody’s (NASDAQ: MCO), Fidelity, Citi (NASDAQ: C), UBS (NASDAQ: UBS), and Ant Group.
Caution is still critical for Singapore. The country was home to Three Arrows Capital (3AC), one of the biggest collapses in the ‘crypto’ world and a key puzzle piece in the 2022 ‘crypto contagion’ that wiped out hundreds of billions of dollars. Further, when FTX collapsed, Singaporeans were among the most affected, with the city-state contributing the second-highest number of FTX users after South Korea.
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