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Singapore is set to grant regulatory consent to a cryptocurrency exchange for the first time as the Asian city-state becomes a key battleground in the digital asset industry’s attempt to woo the dogs of custody in global financial centers.
Australia’s Independent Reserve Exchange has obtained “in principle” approval from the Monetary Authority of Singapore that will allow it to offer digital payment token services.
The company is the first exchange to be formally authorized to operate in Singapore on around 170 applicants, including the Binance and Gemini global exchanges.
The Southeast Asian hub has become a magnet for cryptocurrency companies and executives, as many see it as a friendly regulatory environment. Global financial regulators are increasingly scrutinizing the rapidly growing digital asset sector, trying to balance it with investor protection and stifling the use of cryptocurrencies in money laundering, terrorist financing and criminalization. fraud.
Some groups in Singapore, including Binance, have already been granted an exemption to provide services to retail and institutional investors pending official license. Independent Reserve applied in April 2020.
“We have been waiting for this day for over a year,” said a foreign crypto exchange that operates in the city. “Now everyone is wondering who will get the approval next. “
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Singapore’s resource-poor economy is heavily reliant on financial services and its appeal as a business hub has grown as Hong Kong, a competing Asian financial center, has been seen to be losing its appeal due to China’s broad national security law. The digital asset industry has become another front in the competition from rival cities.
As in mainland China, Hong Kong has taken a tougher stance on the free-wheeling cryptocurrency industry. The city is set to restrict crypto trading to accredited or institutional investors under new law.
Singapore, meanwhile, has made it easier for foreign crypto groups to establish offices and serve residents and businesses, albeit with restrictions, including limits on transaction volumes. It introduced a payments law in January 2020 under which companies can apply for a license. About 90 digital asset companies have applied and are operating under an exemption.
In Europe, the UK financial regulator has approved a handful of groups under its crypto regime, which primarily focuses on determining companies’ compliance with anti-money laundering rules. The Financial Conduct Authority said in June that a “high” number of digital asset companies were not meeting its standards and at least 51 had withdrawn their applications.
Singapore’s approval on Monday evening of the Independent Reserve’s application sparked enthusiasm in the industry in anticipation of further approvals to come.
“All eyes are on Singapore and its regulatory regime,” said Raks Sondhi, managing director of Singapore-based Independent Reserve.
MAS wants to make the city-state a global hub for the blockchain ecosystem and the “long process” to obtain the license was due to the regulator’s emphasis on consumer protection and countermeasures. against money laundering, he added.
These included the implementation of the “travel rule,” which requires crypto companies to share personally identifiable information for transactions above a certain value. All successful applicants in Singapore must implement the rule, in accordance with MAS guidelines.
Eric Anziani, chief operating officer of Crypto.com, a digital currency exchange platform with a strong presence in Hong Kong but growing rapidly in Singapore, said geopolitical risk in Hong Kong has intensified. “Singapore is also more favorable to retail investors,” he said. “I think there are more opportunities out there now in terms of talent as well.”
The head of another global stock exchange in Singapore said the “overhang of China” had made Hong Kong less attractive as a crypto destination, especially for safekeeping. “Many of our clients were concerned that the Chinese authorities would stumble upon it and take their assets into offline vaults.”
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