Singapore’s digital assets race – when the Lion roars
This article was created by Zodia Custody, the institution-first digital asset custodian
As the race to attract the digital assets industry gathers momentum, Singapore has emerged as one of the global leaders and a key hub in the wider Asia-Pacific region. According to Statista data, revenue in the Singapore digital assets market is projected to reach €501.6m in 2024, while Fintech Global reports that Singaporean blockchain and digital asset companies raised almost half of FinTech seed deals in 2023.
Known for expertise in both finance and technology and with a high-value pool of talent to draw upon, digital assets have found a genuine home in the Lion City. Indeed this is the case too for, Zodia Custody, a venture of Standard Chartered which has 165 years of history in Singapore, where its first branch was opened in 1859. The Group’s longstanding commitment to business in the country is another key factor in making Singapore a safe and secure home for digital assets.
MAS – The Innovative Regulator
Most regulators tend to keep a lower profile but, the Monetary Authority of Singapore (MAS) has become known as an innovator in its own right. It was early to recognise both the utility of stablecoins, as well as the transformative economic potential offered by tokenisation of assets.
The list of projects spearheaded by MAS is mounting up and notably includes Project Guardian launched in May 2022 and Project Orchid launched in October the same year. Project Guardian is a collaboration between policymakers and industry to test the feasibility of applications in asset tokenisation and decentralised finance. Pilots under Project Guardian include tokenising money market funds through a variable capital company structure; institutional mechanisms on bilateral digital asset trades; and cross-border FX payment solutions. Project Orchid is testing the applicability of digital money in Singapore while this year MAS intends to begin developing wholesale Central Bank Digital Currency for interbank settlement.
MAS is also working with international policymakers and financial institutions to explore the design of an open, digital infrastructure to host tokenised financial assets and applications. The wide variety of projects being worked on and the commitment to exploration is marking Singapore out as a thought leader in all areas of digital assets – be that cryptocurrency, tokenisation or digital fiat currency.
Clarity, Consistency and Connectivity
Singapore is gaining competitive advantages from this regulatory approach. Digital assets firms based in the region – or wanting to locate there – have a clearer policy framework and can feel comfortable approaching the regulator to explore new business models and innovative approaches. MAS has become well-known for its progressive approach, not just on policy. It is working to create connectivity across the ecosystem in Singapore and APAC more broadly and has actively collaborated with others including Hong Kong and Japan to share knowledge and best practices.
This connectivity is much needed to remain competitive on the global stage. With the Markets in Crypto Assets (MiCA) framework now being implemented across the EU, European countries will begin to benefit from a more cohesive policy regime. Other regions now need to keep pace with that change and MAS is working hard to raise the watermark of the APAC region.
Just as London is a gateway to other financial markets, Singapore’s innovative ethos, as well as its timezone, make it a valuable hub for Zodia Custody’s activities in Asia-Pacific. Singapore is now providing greater regulatory clarity around digital assets. In April, it expanded the scope of regulated cryptocurrency-related activities to include custodial services covering both cross-border money transfers and the transmission of crypto between accounts and exchanges. This clarity is vital for a future in which tokenisation of real-world assets is set to grow.
In 2023’s Global Crypto Adoption Index published by Chainalysis, Singapore ranks 77th in the index ranking and is ranked 57th for DeFi value received. Regionally, Central & Southern Asia and Oceania (CSAO) is the third-largest crypto market in transaction volume, accounting for just under 20% of global activity. However, when purchasing power and population are accounted for to measure grassroots adoption, CSAO dominates.
The future certainly looks bright for Singapore’s economic potential when it comes to digital assets. It’s time to hear the Lion City roar.
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