In its Monday, December 20 report, Nikkei Asia suggests that Singapore “is not so welcoming to crypto after all” as entrepreneurs struggle to obtain the license to operate digital payment token services under the new program launched by the Monetary Authority of Singapore (MAS) earlier this year.
And there is, indeed, evidence to support this angle.
Out of 176 applicants, 103 were rejected by the MAS or decided to withdraw their pending application. Among them is the world’s largest crypto exchange, Binance, which announced its exit from the licensing process and the end of user onboarding in Singapore last week (this follows a cease trading order issued by MAS in September).
So far, only four companies have been granted licenses to operate digital payment token (DPT) services: DBS Vickers, the Australian independent reserve, local fintech start-up FOMO Pay, and crypto payments provider. TripleA currency.
Meanwhile, Coinhako has only received a “master approval” from MAS, and the company is now working hard to meet MAS’s requirements to receive the major payment institution license to provide DPT services in Singapore.
At this rate, less than a dozen companies may be able to legally operate crypto services in the city-state after the exams are completed.
Isn’t Singapore engaged in crypto? Doesn’t he believe in innovation? Doesn’t he want to support cutting edge startups and even large, seemingly successful companies like Binance?
Quite the contrary.
Less is more
It takes 20 years to build a reputation and five minutes to ruin it. If you think about it, you’ll do things differently.
– Warren Buffett
Regulators exist not only to protect consumers, but also the country’s reputation by ensuring that harmful activities are not allowed within its borders. They are set up to gain the trust of citizens and foreigners alike.
On the one hand, MAS’s role is to ensure that none of the shady practices that the crypto world has recently become infamous for are allowed to occur in Singapore. The city already has more than enough problems with scams and millions of dollars lost to bogus police and government officials.
On the other hand, it cannot be considered by anyone as a place from which criminal activities radiate to other countries.
Failure to prevent this at the regulatory stage would not only harm thousands of consumers (which would undermine public confidence in the authorities), but also the country itself – and Singapore has earned its strong international position (despite its small size) thanks to the global trust that it has meticulously built over decades.
Second, the current cryptocurrency hype has encouraged many people to venture into technology without sufficient experience. They may be looking to ride the wave of global demand for digital tokens, coins and NFTs, but may not be able to deliver on their promises.
The national regulator cannot approve these companies either, even if their intentions are good.
We don’t need 160 of them to settle here. Half of them can do it, but with very high standards I think it’s a better result.
– Ravi Menon, Managing Director of MAS
For Singapore to become the global crypto hub it intends to be, businesses that register in the city must deliver quality services that will be world-class standardizers, inspiring confidence in the technology and its capabilities.
Selectivity in the licensing process is crucial for this to be achieved, and the fact that authorities are so scrupulous shows the extent of their commitment to innovation.
Nobody needs hundreds of businesses to try – we just need a few really good ones.
This is especially important because the cryptoversy suffers from a bad reputation due to scams, ‘carpet pull’ fraud that robs people of their money, questionable transaction fees, poor customer service, even at giants like Coinbase and Binance, etc.
In order for DeFi services to become mainstream at any given time, they need to showcase success stories that inspire confidence. Allowing free goes against this goal, meaning that it would hinder innovation rather than help it.
The world belongs to those who get up early
As the world struggles to find the best way to approach crypto, Singapore’s leap forward may produce standards that could end up being universally adopted – once again, elevating the role the city-state plays. on the world stage.
This is doubly important given the important role of financial services in the country’s economy, contributing around 16% of its GDP and supporting it as a hub for manufacturing and commerce.
Singapore cannot afford not to be a premier and a major player in finance. He must be both the first to market and a force that will have a say in how the new rules are written.
Otherwise, it would expose itself to foreign competition that – if blockchain technology succeeds in the long run – could relegate Singapore to an inferior league, threatening its status as a financial hub.
The unpredictable nature of innovation is that it is often so large and sweeping that recent leaders may soon find themselves at the bottom of the pile (the story of Nokia’s fall in mobile telephony with the advent of the smartphone is one of the most revealing examples).
Singapore cannot – and clearly does not accept – this risk. At the same time, through the meticulous licensing process, he wants to ensure that he is not only among the first to adopt crypto, but also the first to do so successfully.
Featured Image Credit: PYMNTS