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Cryptocurrency Regulation in Singapore

Unsurprisingly, Singapore often comes first on the list of countries when it comes to choosing a location to start a crypto business in Asia. The main reason is that Singapore is one of the four “Asian Tigers”. The Tigers demonstrate a promising business environment, strong economic development and a cutting edge technology sector. The Tigers’ priority is the development of high-tech industries. In terms of the adoption of robotics and computerization, Singapore ranks second in Asia after Japan.

This post will focus on the critical aspects of crypto regulation in Singapore. Therefore, this short article will prove to be useful for those who want to improve their knowledge of the Singaporean cryptocurrency market conditions before registering their own cryptocurrency exchange there.

Legal regime of cryptocurrencies in Singapore

Crypto-assets in Singapore are governed by the following laws: the Commodity Trading Act (CTA), the Securities and Futures Act (SFA) and the Payment Services Act (PSA). Registering a cryptocurrency company in Singapore involves trading cryptocurrencies under the Commodities Trade Law, working with capital markets products under the SFA, and working with digital payment tokens (DPT).

Currently, there are no laws prohibiting cryptocurrencies ownership, use in business transactions, or the exchange of cryptocurrencies. The registration of a Singapore cryptocurrency company is also a legal issue.

However, after the 2020 Payment Services Act comes into force, buying and selling cryptocurrencies for fiat currencies and facilitating the exchange of cryptocurrencies for fiat currencies may constitute a digital payment token service that will become a regulated activity.

Fiat currency transactions

Singapore has a fairly loose regulation of cryptocurrency and the BTC to SGD, ETH to SGD trading pairs in general. This characteristic is very attractive for companies looking for a similar jurisdiction: one that is suitable for an easy start of a business, with financial statements that fill out quickly and in general in a technologically advanced country.

In Singapore, companies based there are encouraged to obtain a license before providing currency exchange services. In addition, all businesses that accept money and transfer it to foreign individuals must also be licensed.

Before opening a cryptocurrency exchange in Singapore, keep in mind that security token companies are regulated as an “organized market” under the Securities and Futures Act.

Crypto derivatives

The Monetary Authority of Singapore, the country’s main financial regulator, recently submitted a proposal: local exchanges will be able to host and trade cryptocurrency derivatives. It was stated that if derivatives (futures and options) were to be referred to as an asset in an Ethereum or Bitcoin contract, their handling would be governed by local securities laws. In the above regulation, it is not clear enough, if p2p crypto exchanges fall into the same laws. Such exchanges differ from major Centralised exchanges, because of the payment methods and options offered such as buying dogecoin with PayPal, buying litecoin with PayPal and more.

The regulator mentioned that the initiative was launched in response to a request from institutional investors ranging from asset managers to hedge fund managers who wanted more clarity on the rules. The proposal should make cryptocurrency investments in Singapore more accessible to international financial players.

Importantly, the Monetary Authority is convinced that clear cryptocurrency regulatory requirements and a consistent approach to trading cryptocurrency derivatives between regulators are prerequisites for creating a reliable source of asset value for cryptocurrency derivatives contracts.

Tax conditions

Singapore is often a popular jurisdiction for holding ICOs or registering cryptocurrency companies. Entrepreneurs should be aware that companies that receive cryptocurrency as income, mine and trade cryptocurrencies are subject to normal income taxation rules.

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