The regulatory framework for Digital Assets and Cryptocurrencies (Crypto) has been rapidly evolving. Regulators expect that firms play their part to ensure that investing in crypto is as safe as possible for investors and customers or else enforcement will be pursued.
Singapore is presently Asia’s cryptocurrency and blockchain hub with its welcoming attitude towards emerging technologies. Right from 2016, the government expressed its willingness to implement distributed ledger technology in financial services. Singapore is the first country that started regulating the usage of cryptocurrencies in 2014 when most of the world was still immature about it.
So, what’s happening in the Singapore cryptocurrency regulations? Below is the timeline of a series of events and announcements taken towards the crypto industry. Let us find out more!!
31-03-2022: Singapore is the new crypto hub in South East Asia.
The Financial and Geopolitical Factor of Singapore has made it a major emerging cryptocurrency hub in South East Asia. It’s Crypto friendly environment has welcomed unsafe exchanges, crypto lovers, and investors from China.
29-03-2022: Singapore has grand ambitions to become a Global Crypto Hub.
Singapore is seeking itself as a key player for cryptocurrency-related businesses as financial centers all around the world develop approaches to handle one of the fastest-growing areas of finance.
27-03-2022: Coinbase updates itself to adapt to the crypto regulations of Singapore.
Coinbase makes changes in its services to serve the customers in Canada, Singapore, and Japan who are transferring digital assets from their coinbase exchange wallet to wallet off the coinbase platform. from 1st April coinbase will introduce its updates service in consideration of crypto regulations of Singapore.
14-02-2022: Financial Services and Markets Bill 2022.
On Feb 14th, 2022, the MAS released its explanatory brief on the Financial Services and Markets Bill 2022 before Parliament acted on it, enabling enhanced regulation related to Anti-Money Laundering and Counter-Terrorism for VIrtual Asset Service Providers who are registered in Singapore but Amy is not proving services here.
20-01-2022: East Asia Countries are putting regulations in place to prevent the influx of crypto ads.
East Asia countries such as Singapore, are putting regulations in place to prevent the influx of ads from crypto exchanges influencing customers to buy DPTs. In the account of the Rise of meme stocks in 2021 many other Countries also may put regulations in place as Singapore.
Government stance on cryptocurrency
The Monetary Authority of Singapore(MAS) has been studying cryptocurrency developments closely for years. A high-ranking government official also stated the absence of a strong case to ban them. In this scenario, where the surrounding countries are regulating crypto, it has increased pressure on the authorities in the country to clarify their stand on cryptos.
Deputy Prime Minister of Singapore, Tharman Shanmugaratnam, according to a report said that the financial authorities would not distinguish between fiat currencies and cryptocurrencies. And also clarified that the Central Bank would be imposing the existing legal requirements on crypto activities.
The Deputy Prime Minister noted that the use of cryptocurrency for payments in Singapore is limited and trading volumes are much smaller than in countries like Japan and South Korea. He stated,
Recently on January 28, 2020, The Monetary Authority of Singapore’s proposed Payment Service Act (PSA) came into effect which bought all crypto businesses and exchanges based in Singapore under current Anti-Money Laundering (AML) and counter-terrorist- financing (CTF) rules.
According to this law, the cryptocurrency firms need to register with MAS within a month showcasing their local presence. Once registered, they have a six-month grace period to apply for a License. Singapore’s monetary authority will issue three types of licenses depending on the risks and scale of services.
- Money-Changing License
- Standard Payment Institutions
- Major payment institutions
Crypto Taxation
The Inland Revenue Authority of Singapore (IRAS) is the authority that takes care of the taxes in Singapore. Taxation on cryptocurrencies is done in two different scenarios, one when the cryptocurrencies are used as the mode of payment and the other when the cryptocurrencies are used in trading.
The businesses that chose to accept payment in the form of cryptocurrencies are subjected to the normal income tax Act of the country. Taxes would be based on the net profit which is 17% of the taxable income. The business that accepts crypto in the form of payments is required to record the sale based on the open market value of goods or services in Singapore Dollars.
Crypto Mining
At present, there are no specific regulations for the mining of cryptocurrency in Singapore as long as a miner uses his own hardware resources and electricity. A miner is also subjected to taxation too. The cryptos earned after successful mining will be taxed 17% on the net profits.
IRAS states on its website, “ Profits derived by a business which mine and trade virtual currencies in exchange for money are also subjected to tax.” The businesses or exchanges that deal in buying, selling, and mining of cryptocurrencies are taxed based on the profits derived from the trading.
On the other hand, businesses that buy cryptocurrencies for long-term investment purposes may enjoy a capital gain from the disposal of these currencies. However, there is no capital gains tax in Singapore and hence no Capital Gain Tax will be charged on the gains.
Historical Events & Announcements
13-10-2021: Singapore emerges as the new crypto hub in South East Asia. Singapore has been migrating from many Chinese crypto markets since May when China tightened its crypto regulations. South East Asia is a new potential crypto player and Singapore is enabling the crypto boom in the region by providing the enabling environment for users.
16-04-2020:- Blockchain Association Singapore (BAS) announced its official launch which will be responsible for supporting existing and new blockchain companies in the state. The newly formed association is a merger of the Singapore Blockchain Association (SBA) and Blockchain, Enterprise and Scalable Technology (BEST).
28-01-2020: Singapore’s PSA-Payment Service Act came into effect which brought the cryptocurrency and the blockchain under the regulations according to an announcement.
08-10-2018:-The monetary authority of Singapore released licensing guidelines for individuals providing ‘digital advisory services which are nothing but advice on investment products.
23-04-2018:-The co-founder of NUO, Varun Deshpande announced the opening of the world’s first Cryptocurrency Bank. Advanced Robotic Account Managers(AARAM) are installed to deal with the customers. ATM’s will also be provided where-in one can withdraw and deposit cryptocurrencies.
06-04-2018:-Singapore’s Minister of Finance, Hen Swee Keat, said in his speech during the 22nd ASEAN Finance Ministers meeting that Singapore would continue to support innovations in the FinTech industry and acknowledged the fact that the Digital Ledger Technology can provide great potential for the country.
21-11-2017:-The MonetaryAuthorityof Singapore (MAS) proposed a bill to bring the purchase and sale of cryptocurrencies under the umbrella of regulations known as the ‘Payment Service Act’.
03-10-2017:-Deputy Prime Minister of Singapore Shanmugaratnam responded in the parliament regarding regulations on Cryptocurrencies and ICO’s that MAS will regulate cryptocurrency activities and the updated legislation will be introduced expanding and streamlining the scope of existing laws.
01-08-2017:-The Monetary Authority announced its plans to regulate ICO’s.
16-11-2016:-The Monetary Authority announced the development of a blockchain pilot project that will facilitate inter-bank payments, globally. The project aims to develop a payment system that will enable banks to transact between global markets at any time with instant transfer of funds.
29-08-2016:-The central bank of Singapore has proposed a new regulatory framework for payments that would bring digital currency exchanges under surveillance. The framework requires companies to obtain a license from MAS. It has divided payment activities into three categories.
13-03-2016:-The Monetary Authority of Singapore planned to impose a KYC process and reporting of suspicious transactions in order to regulate virtual currencies in order to address money laundering and terror financing activities.
09-01-2014:-Inland Revenue Authority of Singapore (IRAS) responds about the taxation of cryptocurrencies. According to them, companies will be taxed based on virtual currency sales.
22-09-2013:-The Monetary Authority of Singapore issues warnings to the general public regarding the risks involved in trading with cryptocurrencies.
Conclusion
When all the other countries are still working on the recommendations given by the Financial Action Task Force (FATF), Singapore is a step ahead working on it and is ready for implementation at present. Singapore, Asia’s crypto and blockchain hub has provided them with a very friendly environment to operate.
However, they have regulated and bought laws to deal with illegal activities. At present, the crypto market is very well supported here and it is very exciting to witness the future advancements of cryptocurrencies and also the various implications of blockchain technology.
Source: https://coinpedia.org/cryptocurrency-regulation/cryptocurrency-regulations-in-singapore/