While most nations around the world have little on the books for or against the use of Bitcoin and other cryptocurrencies – Singapore is one of the countries that has been at the forefront of the cryptocurrency regulations. The country keeps investing in the latest technological innovations and truly has the potential to become fintech center of the world.
The IRAS (Inland Revenue Authority of Singapore) is one of the first regulatory bodies in the world to determine how digital currencies should be taxed. The ruling states that individuals who made money through Bitcoin investments, would be taxed at the current zero percent capital gains tax rate. This essentially means that all the digital currency transactions involving real money or services, such as buying and selling bitcoins with dollars or paying for services with bitcoins, would qualify for GST (Goods & Services Tax).
According to a report by Deloitte, Singapore has already left Hong Kong behind in the fintech race – ranking at number two (only behind London). In the years to come, disruptive technologies like blockchain will likely determine who stays ahead in the fintech race.
Singapore is well ahead of the curve when it comes to blockchain. The country has already taken some proactive measures to embrace blockchain technology – like establishing the blockchain platform for trade financing, skipping the time-consuming processes including private financing, educating the market, and individual sales. Central bank of Singapore has also decided to use blockchain for their new payment transfer project.
It is clear, this tiny island has made technology innovation a priority. So much so that The Monetary Authority of Singapore (MAS) has a dedicated department called the Fintech and Innovation Group and their directive is to facilitate the use of technology in the financial sector.
Among many collaborations; Singapore’s Infocomm Development Authority (IDA), along with HSBC and Bank of America Merrill Lynch, announced the trial of a new blockchain prototype to execute import-export deals automatically using smart contract technology.
With close to 200 banks making the total assets of $2 trillion the country is making waves in the fintech industry. Global financial institutions like Mastercard, UBS, DBS Bank, OCBC, Wells Fargo and Citigroup are either in the process of launching (or have already launched) their innovation labs and accelerators in Singapore along with significant investments in the ecosystem.
The support from the government doesn’t just stop at the formation of a special agency, but there is a very clear environment and legislative support for financial innovation aka regtech. The MAS has a “sandbox” which allows for time-boxed fintech experiments to test an idea or specific use cases without the need for satisfying licensing requirements. Such flexible regulations has welcomed numerous fintech startups (especially the ones dealing with bitcoin and blockchain) from around the world to Singapore.
Government also puts in significant funds in the form of grants and rebates for fintech initiatives. Over the five year period, the government has committed $225 million SGD for fintech projects. Foreign fintech companies looking to relocate to Singapore find it incredibly easy to setup a company with such corporate structure in place.
The unprecedented support from the Singaporean government is the primary reason why no other country stands a chance. Whether it be regulation, collaboration or innovation, authorities are very quick at taking the right decisions. Even though back in 2013 when multiple bitcoin exchanges were hacked and prices tumbled, Singapore kept working in favor of cryptocurrencies realising its potential.
In late 2015, Singaporean Prime Minister Lee Hsien Long cited Bitcoin and Blockchain technology as a sign of future during a speech. While it faces stiff competition from New York, Hong Kong and London, Fintech is an area where Singapore can leave pack behind.
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Anupam Varshney is a cryptography enthusiast and an amateur traveller. In his pursuit to educate more people about bitcoin and other cryptocurrencies he runs a bitcoin meetup and writes at Bitcoinprice. He also writes about content marketing, branding and SEO. When he is not busy analysing crypto trends, he likes to play chess and wonder why more nations don’t play cricket.