From the 1960s to the 1990s, Singapore was one of the four ‘Asian Tigers’ of the global economy. But its approach to crypto is a more complex story.
In recent months, Singapore has been hit by multiple crypto scandals. Do Kwon’s Terraform Labs, whose stablecoin terraUSD imploded last May, was registered in the city-state. The Singaporean crypto hedge fund Three Arrows Capital filed for bankruptcy a few months later, taking down Voyager Digital with it.
A Conservative Take On Crypto
Before that, Singaporean crypto looked feverish. According to KPMG, in 2021, investment into the Singaporean crypto industry increased tenfold compared to the previous year to $1.48 billion. Representing nearly half of the Asia Pacific total for that year.
In the post-war period, Singapore was a superstar in the global economy. Known as one of the four ‘Asian Tigers’ — alongside Hong Kong, South Korea, and Taiwan — it became synonymous with rapid industrialization and high economic growth, providing a model for developing countries to rapidly improve their standard of living and openness to global commerce. Alongside Japan, these Asian nations became synonymous with modernity and dynamism.
Annual GDP growth, 1976 – 2021. Source: World Bank
At the time, the Asian Tiger growth rates put shame on developed nations in the West. Between 1976 and 2022, Singapore’s GDP Annual Growth Rate averaged 6.26%. Easily beating the most developed economies in North America and northwestern Europe.
Recent analysis shows that in the 21st century, the city-state is proving equally impressive in the global crypto economy.
Singapore Sees Crypto as Inherently Risky
In November of last year, the small city-nation came top of the rankings for cryptocurrency businesses in a report by Coincub. The UK, Cayman Islands, Hong Kong, and the USA followed, in that order. In Q3 2022, Coincub also placed Singapore as the fifth most “crypto-friendly” country. It was only beaten by Germany, Switzerland, Australia, and the UAE. For “crypto activity,” the country ranked thirteenth.
These impressive rankings can seem surprising when judged against recent comments by the central bank’s chairman. Last month in Davos, during the World Economic Forum, the head of The Monetary Authority of Singapore (MAS), and the country’s former Deputy Prime Minister, Tharman Shanmugaratnam, had some frank words for the crypto ecosystem.
I think whether it’s crypto or traditional finance, you have to regulate for things like money laundering — that’s very clear.
But beyond that, if we’re thinking about regulating crypto the same way we regulate banks or insurance companies, I think we have to take a step back and ask a basic philosophical question: does that legitimize something that is inherently, purely speculative, and in fact, slightly crazy?
Shanmugaratnam’s comments are representative of the country’s general attitude to crypto. The technology is seen as worthwhile but within certain contexts. In the past year, its government has focused on its association with money laundering and the financing of terrorism, its risk to general financial instability, and consumer protection. The latter point is particularly understandable and even prescient post-FTX. Like many other countries, Singapore requires crypto firms to apply for licensing to operate.
Classes of Payment Provider Licences in Singapore