Singapore wants to lead on cryptocurrency

Singapore may have set its sights on becoming the world’s cryptocurrency capital. But its “buyer beware” approach to trading in risky digital assets doesn’t mean anything goes. A coin that works as a pension plan for BTS, the world’s most-famous K-pop group, is perhaps beyond the pale.
The Monetary Authority of Singapore (MAS), which had earlier allowed Bitget, a popular digital exchange, to issue tokens to Singapore investors pending a full license, suspended that privilege in July, the Financial Times reported. The exchange has attracted controversy by promoting Army Coin, whose goal is to “take care of BTS members for life.” Hybe Co, the band’s publicly traded management company, wasn’t amused by the unsolicited offer and has threatened legal action, according to the FT.
The MAS website simply notes that Singapore Bitget no longer enjoys an exemption from holding a license under its 2019 payment services reguations. It doesn’t give a reason for its determination. But the central bank’s annual financial stability report released acknowledged for the first time that “the increased prominence of crypto-assets warrants heightened surveillance.” While it’s not an immediate worry — peak trading in tokens using the Singapore dollar has been less than 1% of the average daily turnover on the local stock exchange — a rising share of blockchain-based coins in investors’ portfolios could create a pronounced wealth effect.
Consumption could be “subject to considerable shocks” because of the inherent heightened volatility of such assets, the MAS noted.
Singaporeans are the most affluent they have been in at least a decade. Their net wealth, which has typically ranged between 3.5 and 4 times gross domestic product since 2010, was 4.6 times GDP at the end of the last quarter. The main source of prosperity on the land-constrained island is residential property, which accounts for about 40% of household assets and 75% of liabilities. Private home prices have risen almost 9% since the start of the pandemic. At the same time, higher precautionary savings and fewer opportunities for discretionary spending have squeezed rollover credit-card debt to a new low of 1% of GDP. Cash and deposits now exceed family debt by a wide margin.
A wealthy, liquid household sector in what’s already a rich megalopolis — after adjusting for purchasing power of the local currency, per capita GDP was almost $100,000 last year — can attract all kinds of weird financial products. While the city-state has taken a conscious decision to be a key global player for crypto-related activity, it doesn’t want to open its doors too wide, either. Of the 170 applicants last year for licenses to offer tokenized assets in Singapore, only 70 still remain in the running, including the local units of Coinbase Global Inc and Binance Holdings Ltd, Bloomberg News reported in November.
Among the entities that have already won the license, DBS Group Holdings Ltd’s digital exchange saw assets in custody tripling in just one month to $440 million by end-October.

—Bloomberg