Blockchain in Singapore: how Asia’s financial centre is using technology

Singapore is the financial centre of Southeast Asia. But to maintain its status, it needs to keep abreast of modern technology developments, keeping up with the Fourth Industrial Revolution.

Among the technologies that could change the rules of the game in the market is blockchain – experimentation with this system in Singapore has already begun. Back in 2016, the Monetary Authority of Singapore began work on the Ubin project. The initiative aims to explore the use of a distributed ledger for payments and securities transactions.

As part of the project, a Consortium of technology companies and financial institutions was established. This included organisations such as Microsoft, J.P. Morgan, R3 and BCS Information Systems.
Since then, the project has made significant progress. One of the invented prototypes will be used by the Singapore Exchange (SGX) – the distributed ledger will be used to improve the efficiency of securities transactions. The project is also exploring new methods of making cross-border payments using the central bank’s digital currency.

Through these initiatives, the Monetary Authority of Singapore has become familiar with the new technology and how to regulate it. In an interview with CNBC, the authority’s chief FinTech officer said:

Don’t be afraid to experiment and don’t fall into the trap of changing policies. Some regulators are afraid to experiment because of huge external pressures. We are trying to promote this tradition globally
Sopendu Mohanty
chief fintech officer

Blockchain in Singapore: a regulatory approach

As the lead authority on Blockchain regulation, the Monetary Authority of Singapore is willing to experiment, but remains cautious in its approach to innovation. In December 2017, MAS warned the public to “proceed with caution and understand the significant risks of investing in the crypto industry”. In addition, the authority published a list of key risks that investors should consider on its website.

The MAS also actively monitors cryptocurrency exchanges and ICOs. In May this year, the MAS sent a request to an ICO company to stop issuing digital tokens, arguing that the issuer was not complying with MAS rules.

The fact is that the tokens of this project were equity shares. This made them securities that require registration with MAS under the Securities and Futures Act (SFA).

The MAS has also warned eight cryptocurrency exchanges against trading in tokens, which are considered securities or futures, without MAS approval.

The authority sees no need to restrict the growing number of ICOs if they are “bona fide” companies. But will take strong action against any exchange, issuer or intermediary that violates the rules.
Lee Boon Nyaap
Assistant manager of capital markets at MAS


With Singapore’s regulators choosing a cautious yet encouraging approach to blockchain, the country has a chance to become a hub for the technology.

What is blocking the development of Blockchain in Singapore?

However, there are still factors that hinder the development of the technology in Singapore. At the Beyond The Hype | Blockchain Insights From Industry Experts event, attended by PWC, VeChain, Vision Capital and Tokenize Exchange, it was discussed that traditional financial institutions should collaborate with blockchain organisations. Only then will the industry thrive.

Last year, the relationship between traditional financial institutions and blockchain companies was far from cooperative. More than 10 cryptocurrency firms in Singapore complained that their bank accounts were closed, making it impossible to continue operations.

One cryptocurrency firm, NuMoney, was even forced to use its own safes to store funds. Which points to a mistrust between banks and cryptocurrency organisations.

Examples of collaboration

However, traditional financial institutions are gradually starting to become more loyal to distributed ledger technology. OCBC Bank, HSBC and Mitsubishi UFJ Financial Group (MUFG) are working with the Singapore Media Development Agency to develop a prototype Know-Your-Customer (KYC) policy on Blockchain. And private equity platform CapBridge has also entered into a strategic partnership with blockchain application developer ConsenSys. The technology is planned to be used in the operation of a local cryptocurrency exchange.

As Singapore’s ecosystem becomes increasingly blockchain-friendly, the technology is showing rapid growth. And while cryptocurrencies and ICOs are only a small part of blockchain’s potential, due to restrictions imposed on these industries in China, Singapore has become the third-largest ICO market after the US and Switzerland.

Blockchain funding in Singapore has reached record levels. In 2017, for example, 92 deals worth $512 million were closed.

Looking at these figures, the chairman of the Singapore Association of Cryptocurrency Enterprises and Startups said:

“We cannot say that Singapore has become an ICO hub – there is still a lot of work to be done. But there has been a lot of activity in the industry since last September
Anson Zell
Chairman, Singapore Association of Cryptocurrency Enterprises and Startups

We can be optimistic that Blockchain will play a key role in Singapore’s quest to cement its position as the financial hub of Southeast Asia