By Roger Lim
Contrary to beliefs that guidelines may essentially diminish interest in blockchain and crypto, it in fact, helps to legitimise the industry in the eyes of mainstream audiences institutional investors
The Asia Pacific region has emerged at the forefront of cryptocurrency adoption with burgeoning financial hubs like Hong Kong, South Korea, and Singapore taking a welcoming stance towards the innovative potential of blockchain technology. As talks of mainstream adoption fill the airwaves, regulatory bodies continue to reevaluate their guidelines on crypto regulations, namely as they pertain to Initial Coin Offerings (ICOs). An often contentious area of crypto, ICOs continue to be met with skepticism by regulators and investors alike.
The Monetary Authority of Singapore (MAS) revised its guidelines for ICOs earlier this month, followed closely by the Hong Kong Securities and Exchange Commission (SFC), which tightened its ICO regulations, including adding a clause that now limits the sale of digital assets to professional investors. This follows a trend of Asian nations generally increasing crypto laws on traders and exchanges. Markets such as China have opted to ban ICOs altogether.
With stiffer regulations, does this mark the demise of crypto investments, and as a result, innovation for the industry in Asia?
As one of the world’s leading innovation hubs, Singapore strikes a unique balance between support, stability, and control. Notwithstanding concerns of crypto crime, security, and fraud, interest in blockchain and cryptocurrencies continue to flourish in the region.
To address current concerns and to better safeguard both investors and citizens alike, the MAS broadened its policies to enforce existing Anti-Money Laundering (AML) and CFT (Combating the Finance of Terrorism) policies to ensure that all token issuances now have know-your-customer (KYC) and AML obligations. Any digital token that constitutes a product regulated by MAS will be similarly subjected to and must comply with the applicable securities laws. The updated guidelines also state that unless otherwise exempted, operators of platforms that issue digital tokens must hold appropriate credentials, such as a capital markets services license. Projects operating trading platforms in relation to digital tokens regarded as securities or derivatives contracts must have MAS approval, and be recognised as a market operator under the Securities and Futures Act. The upcoming Payment Services Bill was also addressed as part of the recent update, as it now expands its scope to address the dealing and exchange of cryptocurrencies. As one of the remaining applications of crypto that has yet to see stringent regulation, businesses intending to use cryptocurrencies will need to adhere to licensing requirements, as the bill serves to not only promote ease-of-business, but ensure, first and foremost, that consumers are protected from industry risks.
Contrary to beliefs that guidelines may essentially diminish interest in blockchain and crypto, it in fact, helps to legitimise the industry in the eyes of mainstream audiences institutional investors, and leading enterprises, while the enhanced clarity builds long-term positive perceptions. While it may also seem to stifle innovation, this simply isn’t so –– the government’s fintech sandbox environment provides a supportive and legal environment for viable fintech projects, encouraging the development of real-world blockchain use cases in areas such as insurance, trade, and financial services. With various grants such as the FinTech Fast Track initiative, the Financial Sector Technology and Innovation scheme, and the Early Stage Venture Fund to name a few, it’s clear that Singapore’s commitment to the adoption and support of emerging technology such as blockchain holds strong. Coupled with strong support from academia such as the National University of Singapore’s CRYSTAL (Cryptocurrency Strategy, Techniques, and Algorithms) Centre, a research laboratory and think tank on blockchain, the country is committed to sustaining a strong foundation to support blockchain initiatives, research, and development.
The regional blockchain ecosystem continues to thrive and comprehensive regulations serve to further guide projects as they continue to develop locally in Singapore and as they look to expand internationally.
As the year draws to a close, the future of blockchain continues to be a dynamic one. With regulations, standards, and infrastructure becoming more mature over time, the industry will evolve accordingly, adjusting its expectations as market investors grow more and more cognisant of its capabilities. For now, the blockchain industry is tasked with making the concerted effort in driving the narrative of its growth, as it continues to develop innovative solutions that can potentially benefit mainstream audiences and enterprises, and traditional financial investors alike.
Roger Lim is a founding partner of Neo Global Capital (NGC), a strategic investment vehicle and one of the largest institutional owners of cryptocurrencies.