Cryptocurrency in Singapore
The world is coming to terms with the burgeoning technology of blockchain, and Singapore is adopting a firm but fair approach. Singapore is considered very friendly towards blockchain and distributed ledger technology like other financially progressive and innovative countries such as Switzerland.
The position from the Singaporean government has given leeway for citizens to invest and experiment with crypto in Singapore, but they warn of the risks and volatility involved. The government itself experimented with tokenizing the Singapore dollar via blockchain with their “Project Ubin.”
Singapore and blockchain have been making headlines recently as Singaporean-based investor Vignesh Sundaresan purchased the highest-selling NFT at $69M. Singapore is also home to several crypto businesses and currencies, including the Litecoin Foundation, Zilliqa, HODLnaut and Three Arrows Capital.
This beginner's guide will cover the legality and general climate of crypto and blockchain projects in Singapore.
Is Cryptocurrency Legal In Singapore?
Yes, cryptocurrency is legal in Singapore. The nation has been heralded as a haven for crypto and blockchain projects. The Monetary Authority of Singapore (MAS) keeps track of cryptocurrency and blockchain regulation. This regulatory body has recognized both the benefits and risks of the new technology, and their lawmaking has reflected that.
“As of now, there is no strong case to ban cryptocurrency trading here. But we will be subjecting those involved as intermediaries to our anti-money laundering regulations. And we will keep highlighting to Singaporeans that they could lose their shirts when they invest money in cryptocurrencies.” - Mr. Tharman Shanmugaratnam, Minister in Charge of MAS, 2018
Although Singapore’s government is innovative and friendly toward cryptocurrencies, crypto organizations still face some hurdles. Many banks do not allow crypto-based businesses to open accounts, and there is a formidable process involved in gaining recognition from the Monetary Authority of Singapore. However, even though the government is wary, they are working quickly to provide a common clarification of rules so the crypto ecosystem can flourish in Singapore.
- Code of Practice (2020) - The Association of Crypto Currency Enterprises and Start-ups Singapore (ACCESS) has worked with the MAS to create a new Code of Practice to help speed licensing and ethical compliance practices within crypto organisations. This initiative is one of the latest collaborative acts between the blockchain community and the government of Singapore.
- Payment Services Act (2019) - The PSA worked to regulate crypto payments, exchanges and business licensing by clarifying some important points. The PSA created guidance for establishing and operating crypto businesses in Singapore while combating money laundering and other unethical practices.
- Securities and Futures Act (2018) - The securities and futures act covered matters including initial coin offerings (ICOs) and licensing requirements for crypto businesses in Singapore. The regulation classified which ICOs would be considered financial securities offerings.
Main points of crypto legality in Singapore:
- Cryptocurrency is legal in Singapore as a digital asset
- The Monetary Authority of Singapore regulates crypto
- Singapore has a strict anti-money laundering stance
- The Code of Practice coordinates compliance with the government
- The Payment Services Act regulates exchanges, payments and licensing
- The Securities and Futures Act regulates ICOs and provides common classifications
Are Crypto Assets Taxed in Singapore?
There is no capital gains tax in Singapore for any assets. Singapore is a global business hub in part due to its lenient tax laws for businesses and corporations. The Inland Revenue Authority of Singapore classifies cryptocurrencies into two categories:
- Digital Payment Tokens - Tokens that are expressed as a unity, are fungible, are intended as a medium of exchange and are not pegged to any currency, like BTC and ETH, fall under this classification. They are not taxable.
- Stablecoins - The IRAS may apply the goods and services tax to stablecoin transactions to prevent businesses from using them to skirt taxes.
For beginners with crypto in Singapore, stablecoins are tied to a fiat currency (like the SGD), so they don’t experience the same volatility as other coins. Both businesses and individuals profiting from the rise in value of cryptocurrencies will not have to pay any tax upon realizing their gains.
Taxes on Mining
Cryptocurrency miners will be subject to a 17% tax on their profits from mining. The IRAS regulates mining with the Income Tax Act.
Who Accepts Cryptocurrency in Singapore?
Many businesses in Singapore allow payment in cryptocurrency, with more joining as the popularity of Bitcoin and crypto soars. From small cafes to larger companies, crypto is becoming more widely accepted.
Here are some of the places that accept crypto payments in Singapore:
- Ryde - Singapore’s premier ride-sharing app has been letting users pay in bitcoin since 2020. The desire for cashless payments rose during the pandemic, and they created what they hope will turn into a completely decentralized RydePay wallet.
- Quantified Assets - Quantified Assets is a private investment company that specializes in precious metals and cryptocurrencies.
- Ducatus Cafe - The Ducatus Cafe touts itself as the first cashless cafe and digital coin offering. Their unique business plan has expanded into facilitating crypto payments for real estate, travel and charity.
These are just a few of the companies that allow payments in crypto, with more joining every year. Singaporeans still use cash heavily in day-to-day transactions, but the transition to a more cashless economy is hastening.
Where Can You Buy Crypto In Singapore?
Cryptocurrency is classified as property in Singapore and can be bought via several exchanges. Here are some of the places citizens can purchase bitcoin and other cryptos.
Coinbase - Coinbase is one of the most popular crypto exchanges in the world. They offer all services to Singapore citizens to buy, sell and trade crypto.
Bitcoin ATMs - There are a number of Bitcoin ATMs spread around Singapore that offer users the ability to exchange cash for bitcoin. However, these ATMs can have hefty transaction fees of 5-10%.
Coinhako - The Coinhako exchange advertises itself as the easiest way to buy crypto in Singapore. They boast low fees and easy-to-use mobile apps.
Binance.sg - Although the main Binance.com platform is available to Singapore citizens, the Binance.sg platform is Singapore-based and regulated by the Monetary Authority of Singapore. There are pros and cons to each platform, and Binance.sg has fewer features than the main platform.