Rapid innovation in financial services in Singapore has spurred the nation into becoming a regional fintech hub. Known as The Asian Silicon Valley, Singapore is home to many fintech, holding more than 40 per cent of the regional market share.
In H1 2021 alone, the fintech sector clocked in 72 deals worth US$614.2 million (S$833.8 million), a 22 per cent jump from last year.
This number is expected to continue upward as more fintech, including crypto companies, pour in investments.
Singapore is becoming a hotspot for global crypto companies with its crypto-friendly regulations, investor-oriented climate, and evolving licensing regime.
They have quadrupled in number since 2017, resulting in a vibrant yet highly competitive environment that fuels growth and innovation.
As such, for crypto companies planning to launch and expand their business in Singapore, being aware of the current landscape is crucial to helping them thrive.
Understanding Singapore’s cryptocurrency market
As of January 2020, the Payment Services Act (PSA) requires all-digital payment token providers (DPT), including cryptocurrency trading platforms, to be registered and licensed.
Also Read: Why is there no crypto ETF yet in Singapore?
The act streamlines payment services under single legislation and calibrates regulations according to the activities’ risks by adopting a modular regulatory regime.
Recently, Singapore issued its first licenses to a cryptocurrency exchange, a bank and a fintech player to operate as a fully regulated virtual asset service provider (VASP). These “in-principle” approvals being given are reflective of the mainstream adoption of cryptocurrencies.
Singapore is undoubtedly beginning to embrace crypto— evidenced by Coinhako’s massive 1000 per cent jump in trading volume in the first eight months of 2021, compared to the whole of 2020. Our trading volume is expected to cross the ten-billion-dollar mark by the end of this year.
Overcoming the cryptocurrency stigma
Even with Singapore’s innovation-friendly climate, helming a cryptocurrency business in Singapore comes with its set of unique challenges.
Most notably, banking remains a hurdle for crypto businesses. They are often subject to extensive due diligence or immediately classified as high-risk businesses because of the nature and risk factors of crypto trading.
Most crypto platforms rely on third-party solutions to facilitate their transactions.
As of April 2021, the combined peak daily trading volume of three prominent cryptocurrencies quoted in SGD (Bitcoin, Ethereum and XRP2) amounted to only two per cent of the average daily trading volume of securities on the Singapore Exchange 2020.
This shows that cryptocurrencies are still seen as highly volatile assets as their value is not tied to economic fundamentals.
The central bank, too, has increased surveillance of crypto businesses to identify suspicious platforms and is constantly raising public awareness on the risks of trading in crypto.
Entering a new market as a crypto player
Entering a new market should be done the right way. The first step in becoming a crypto player is ensuring compliance with the local laws and regulations. Having a sense of security is important to crypto users.
Also Read: You don’t care about crypto but here are some things you need to know about DeFi
One factor driving them to regulate crypto players is the rise in scams while trading on peer-to-peer (P2P) crypto platforms. These platforms allow individuals to exchange cryptocurrencies directly on their terms, hence the high risk involved.
On top of being compliant and ensuring the best security, offering a user-friendly platform is essential.
Ensuring the platform offers users a robust variety of cryptocurrencies is crucial – meeting the demand for tokens in the crypto market and minimising the risk of trading in a single currency.
Apart from that, enabling users to trade in local currency, giving pricing, withdrawal options, security, and the number of coins available for trading is vital in creating the most conducive crypto exchange environment.
Crypto players can widen the appeal of cryptocurrency and expand their user demographics by tapping into different industries, sports, financial institutions or even technology and media.
Coinhako recently unveiled its venture into e-sports, with sponsorship for Mobile Legends team ALMGHTY, an up-and-coming Singapore e-sports squad.
Approximately half of the sponsorship value is paid in Ethereum, marking Singapore’s first cryptocurrency funded e-sports sponsorship.
With supportive regulations growing in Singapore and the country’s innovative approach to cryptocurrency trading, users are increasingly assured of safe trading platforms.
For Coinhako, complying with the PSA to acquire the necessary licenses remains a top priority. It continues to solidify its position as a leading cryptocurrency service provider in Singapore and the Asia Pacific.
By offering multiple locally preferred payment methods, including S$ bank transfers and card payments, Coinhako can provide a seamless and simplified trading experience for its users.
Also Read: 3 key pillars of crypto trading for the modern trader
As the industry evolves, assuring the security of trading platforms while ensuring user-friendliness will be crucial. The success of crypto trading lies in the technology and the country’s regulations and advisory, which allow for its widespread acceptance.
Moving forward, crypto businesses need to innovate their services and roll out new offerings to remain relevant in Singapore’s highly competitive market.
Crypto trading’s demand and appeal will only expand if it is seen as practical and relatable in day-to-day activities.
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