Here’s how the MAS’s rules might affect businesses and investors

A few months back, a friend of mine decided to invest in Bitcoin for the first time.

He’d read about the Shiba Inu token’s amazing climb earlier that day. The possibility of becoming a millionaire overnight drew him in, as it did anybody else. He’d created an account on Crypto.com, performed the Know Your Customer (KYC) procedures, and purchased 1.5 million Shiba Inu coins by midday.

Singapore is one of a select few countries where purchasing cryptocurrency is as simple as it gets.

As of now, nine nations have outright banned cryptocurrency, with China being one of them. Another 42 have limited prohibitions on the use of cryptocurrency.

Simultaneously, there are a large number of countries that are currently in limbo. Russia and India, for example, are both pursuing legislation that is hostile to blockchain technology.

What is the purpose of cryptocurrency regulation?

To put it another way, regulating cryptocurrency is a balance issue. It’s a question of balancing the benefits of innovation against the dangers of financial instability and crime.

Singapore has a lot to gain on the other end of the spectrum, with China trending far right. The country has become a crypto hotspot in Asia over the last few years, thanks in large part to the freedom that enterprises have had while experimenting with blockchain technology.

It also helps that Singapore has maintained a consistent policy on cryptocurrency. The Monetary Authority of Singapore (MAS) has acknowledged the potential benefits of blockchain technology, as well as the risks, even in times of high volatility and heavy speculation.

Bitcoin soared from US$1,000 to just under US$20,000 in value in 2017

Consider the year 2017. Following Bitcoin’s historic run this year, China has prohibited financial institutions from assisting cryptocurrency transactions. Meanwhile, Egypt proclaimed cryptocurrency to be an unlawful currency on its whole.

These judgments may have rescued retail customers from dangerous investments, but they did so at the expense of innovation.

MAS, on the other hand, just issued warnings, as it has done for the past many years. Because of the volatile value of cryptocurrencies, retail investors are urged not to treat them as investment assets. They were not, however, forbidden from investing if they so desired.

While operating in Singapore, blockchain companies have had similar freedoms, including the ability to continue operations while the MAS considers a course of action. Even today, these businesses are allowed to operate under an exemption while they pursue a Payment Services Act license.

Why did Singapore issue crypto licenses in the first place?

Singapore has not enacted any new legislation to regulate cryptocurrency.

Rather, the MAS is enforcing existing securities rules to regulate the space. This is due to the fact that some digital tokens are now being utilized in the same way that traditional securities like stocks and mutual funds are.

The MAS can maintain the baseline quality of safety and protection for retail investors by grouping traditional and digital securities together.

Crypto exchanges will be required to keep a certain level of capital and have the resources to secure assets under this standard. These clauses, along with a long number of others, can help prevent some of the current scams in the crypto field.

Is Singapore becoming less crypto-friendly as a result of this?

It all depends on your perspective. On the one hand, these rules make it more difficult to start a company that deals in digital securities.

The MAS had withdrawn or rejected over 100 of these businesses’ applications (out of 176) according to a report from December 2021.

Binance, the world’s largest cryptocurrency exchange by daily trading volume, was one of these firms. The exit of Binance from Singapore sparked speculation that the country is no longer the crypto refuge it once was.

But this isn’t always the case. It appears that Singapore has become more hostile to cryptocurrency-related frauds and scams, rather than to cryptocurrency itself. The Securities Regulations are only used when they are absolutely necessary. Exchanges that do not plan to engage in digital securities can continue to operate as usual.

To be clear, digital securities are crypto tokens that indicate ownership in an underlying asset or that can be used to claim the debt.

This excludes the most well-known cryptocurrencies, such as Bitcoin and Ethereum. In its attempt to control a sector of the crypto space, the MAS has taken care not to impede the crypto space as a whole.

Over 90 per cent of survey respondents had heard of Bitcoin in 2021

From the standpoint of a retail investor, Singapore remains as crypto-friendly as it has always been. It’s really simple to set up a wallet, buy coins, and gain access to everything the blockchain has to offer.

Apps like Crypto.com even have their own debit cards that may be used on a daily basis. Users may earn bitcoin cashback and instantly change between crypto and fiat currency.

These new restrictions may even encourage more people and businesses to adopt cryptocurrency. They’ll be able to diversify their savings without fear now that their concerns about investment safety have been addressed.