Over a decade since the release of Bitcoin, cryptocurrency and its role in the global financial markets is too big to ignore. However, government apprehension, due to concerns over its potential use in unregulated and illegal activity, has seen a swarm of global crackdowns on the industry.
Setting up a blockchain technology company in 2021 is therefore best suited to jurisdictions where there are clear legal and regulatory frameworks. This ensures secure access to banks and other institutions that require strict compliance.
The financial services hub in Asia has long been a coveted title fought over between Hong Kong and Singapore. With the tightening grip of Chinese regulatory pressures over Hong Kong in recent years, investor sentiment for cryptocurrency business set ups has shifted towards Singapore.
Hong Kong, long seen as the biggest financial services hub of East Asia, is perceived to be losing its attractiveness due to the unpredictability of Chinese clampdowns and a strict stance on the cryptocurrency industry. Current policies limit crypto trading to only accredited institutional investors with over US$1 million in capital.
Singapore, on the other hand, has taken a warmer approach, encouraging foreign crypto retail traders and companies alike to set up shop on the island. With a more relaxed and business friendly regulatory environment for both retail and institutional investors, Singapore has its sights set on consolidating the Asian cryptocurrency market. The granting of its first cryptocurrency exchange licence to Australian Independent Reserve (with over 300 more submissions being reviewed) has opened the floodgates to the country becoming the digital asset hub of Asia, and a key player on the global stage.
The Monetary Authority of Singapore (MAS) has signalled intent to establish a strong blockchain ecosystem, focusing on regulation, consumer protections and anti-money laundering (AML) considerations. Clear legal and regulatory frameworks will ensure investors no longer need to navigate ambiguous rules and worry about changing stances on policy from the government.
For Singapore, the establishment of a cryptocurrency market would appear to fit directly into its financial service-based economy. The nation is poor on natural resources, and its long-standing financial ecosystem has been at the core of the economy for decades. However, the roll-out of their regulatory frameworks and license approvals over the coming months will be decisive and watched closely by anxious cryptocurrency investors.
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