Factbox: Singapore’s Rise and Fall as Asia’s Cryptocurrency Hub

HONG KONG/SINGAPORE, July 12 (Reuters) – Singapore’s booming cryptocurrency sector has been shaken by the recent collapse of the cryptocurrency hedge fund Three Arrows Capital and signs of tighter oversight by regulators at the Monetary Authority of Singapore. read more

Below are the key facts about Singapore’s emergence as an Asian cryptocurrency hub and the fallout from the Three Arrows collapse.

HOW IMPORTANT IS SINGAPORE TO THE ASIAN CRYPTOSEctor?

Investments in Singapore’s crypto and blockchain businesses rose to $1.48 billion in 2021, ten times the previous year and nearly half of Asia-Pacific’s total for 2021, according to KPMG.

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PwC claims that 6% of global crypto funds are based in Singapore, ranking it third in the world – along with Switzerland and Hong Kong – behind the US and UK.

Singapore, one of Asia’s leading investment banking and wealth management centers alongside Hong Kong, aims to play a leading role in fintech, including blockchain and crypto.

WHY HAS SINGAPORE ATTRACT CRYPTO COMPANIES?

The scale and reach of Singapore’s crypto firms and service providers has attracted digital asset companies fleeing regulatory action elsewhere.

These include Huobi, a crypto exchange that was initially focused on China and now has a large presence in Singapore.

American companies such as the crypto exchange Gemini have a regional headquarters for Asia located in Singapore.

The city-state also spearheaded the development of a crypto business licensing regime, attracting many companies in the hopes that approval from a top regulator would help them land business.

Other market leaders such as crypto exchange Coinbase (COIN.O) have applied for licenses in Singapore.

DBS (DBSM.SI), Singapore’s largest bank, has launched its own crypto exchange.

WHY HAS 3AC COMBINED?

Digital currencies have been in decline for months, with Bitcoin losing about half of its value since early May.

The sell-off was triggered by the collapse of the stablecoin TerraUSD and its paired token Luna, resulting in significant losses for holders like 3AC. The company lost about $200 million from its investment in Luna, an executive told The Wall Street Journal last month, adding that the company was still trying to quantify its losses.

According to US court documents, several of 3AC’s lenders have defaulted on her.

WHAT ARE SINGAPORE REGULATIONS?

Statements from the Monetary Authority of Singapore indicated a welcoming approach, encouraging crypto-related services.

At the same time, some companies say calming rhetoric from authorities belies a sometimes harsh regulatory stance.

Only a handful of approvals have been granted so far among more than 100 applicants for new crypto payment licenses.

Chia Hock Lai, co-chair of the Blockchain Association Singapore, said there are currently more than 200 crypto businesses in Singapore, but several have been closed or relocated after the licensing regime went into effect.

The most notable of these is Binance, the world’s largest crypto exchange, which left Singapore under global scrutiny last year. read more

Like regulators elsewhere, MAS has also indicated that it will take a strong stance on money laundering, consumer protection and other risks that may be associated with the digital currency industry.

Tharman Shanmugaratnam, prime minister and chairman of MAS, told parliament last week that the regulator is considering additional consumer safeguards for cryptocurrency trading, although he did not mention 3AC.

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Reporting by Alun John and Chen Lin; Editing by Edmund Klamann

Our Standards: The Thomson Reuters Trust Principles.

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