Singapore: With over $2 trillion in market capitalization and an estimated 200 million users worldwide, cryptocurrencies are under the regulatory spotlight as they gain traction among investors.
In Singapore, digital payment tokens have been issued to three entities, and there could be more on the way.
Digital Payment Token Service involves buying or selling digital payment tokens, or providing a platform to allow people to exchange these tokens in Singapore.
As the industry continues to evolve, experts say there are some challenges, including how to set regulations for something decentralized by design.
According to crypto exchanges like Luno, banning crypto outright means closing the door to the underlying blockchain technology and its benefits.
“Technology per se is neither good nor bad… The important thing is to have regulation that pretty much codifies the framework and can eliminate the bad stuff and not let them work, which is what you see the likes of Singapore doing,” said Mr. Vijay Ayar, Vice President of Luno. For the Asia Pacific region and global expansion.
A complete ban could also prompt investors to look for alternative options.
“More people will find ways to keep investing their money in cryptocurrency…instead of promoting growth and facilitating growth, you are just going to pay people to break the rules,” said Airell Ang, legal assistant at Magna Law Corporation. .
Mr. Ang said the flexible approach allows both industry players and regulators to grow, learn and facilitate the growth of this “exciting industry”.
“Take a look at the tough US stance against cryptocurrency, as they view it as a form of security and enforce existing securities laws on it. Basically what this means is that retail investors have to report their realized gains and losses, and not doing so will call for scrutiny. On the part of the authorities, this strict and comprehensive treatment of cryptocurrencies will deter financial development and innovation in such new areas of technology,” said Mr. Ang.
Countries will also have to follow a fine line between regulation and innovation. According to Mr. Ang, being able to strike this balance can be beneficial.
“This is precisely why Singapore is such an attractive jurisdiction because apart from being a good regulator where it usurps the knuckles of non-compliant entities, it also recognizes that excessive control over players will stifle innovation,” he said.