Singapore has no plans to regulate crypto currencies like the Bitcoin. If necessary, however, the city-state wants to subject individual entrepreneurial activities related to virtual money to legal regulation. This is the result of an interview with the head of the Singapore Central Bank.
The most important crypto currencies have increased significantly since the beginning of the year. The capitalisation of Bitcoin alone rose by more than five and a half times to currently over 100 billion US dollars. As a result, digital means of payment have come into the focus of regulatory authorities worldwide. For example, China and South Korea have banned the raising of capital by Initial Coin Offerings (ICOs). Communist Vietnam prohibits virtual currencies altogether. Russia goes a little less far. President Putin demands by decree a registration obligation for Miner and the subordination of ICOs under securities law.
Activities, not regulating crypto currencies
Singapore may not follow this trend. In an interview with Bloomberg, Ravi Menon, Managing Director of the Singapore Central Bank, says: “At the moment I don’t see any reason why crypto currencies should be regulated. Menon is aware that crypto money is often used for illegal purposes. But the risk, in his opinion, does not come from the digital currencies themselves, but from the activities surrounding them. For the central banker it is therefore clear that the legislation must deal with the risks of these activities and not with virtual money as such.
Securities law applies to ICOs with dividend promises
Menon points out that trading platforms and other crypto currency intermediaries are already subject to Singapore’s anti-money laundering and anti-terrorist financing rules. In addition, a new law is underway for payment service providers that formalizes these rules. Unlike the Russian president, Menon sees no need to subject ICOs to securities law in general. However, securities law is already being applied in Singapore today if dividend-like advantages are promised within the framework of an ICO.
The head of the central bank is not alone in his open stance towards Bitcoin and its Singapore counterparts. Already at the beginning of October, the Deputy Prime Minister of the island state denied the intention to regulate crypto currencies in his answer to a parliamentary question.
As one of the so-called tiger states, Singapore managed to make the leap from an emerging country to an industrial state or an economy primarily geared to services within just a few decades. The development of the economy began in colonial times. Already in the 19th century, when Singapore became a British colony, it was regarded as a large goods transhipment centre with its very favourable water traffic location between China and Europe. As a result, commercial and industrial areas are located mainly on the coasts. Many products are merely processed or refined in Singapore, e.g. food, oil, rubber, steel and machinery. Singapore’s trading partners are the USA, Great Britain, China, Japan, Hong Kong, Malaysia and Thailand. Despite its small size and small population, Singapore was the eleventh largest exporting nation in the world in 2016 with exports of goods and services worth 511 billion US dollars. Singapore was also one of the few nations in the world in which the value of exports exceeded that of gross domestic product, which demonstrates Singapore’s close links with world trade. In the World Economic Forum’s Global Competitiveness Index, Singapore ranks second behind the USA in 2018.
There are still disputes with Malaysia about the water supply and the billing of the costs incurred. Singapore is urgently dependent on water imports. Water is supplied by Malaysia and treated by Singapore. There are also (border) disputes over Singapore’s land reclamation, bridge construction and maritime borders. Malaysia contractually guarantees water supply until 2061.
Singapore is one of the most deregulated and privatized economies in the world. It ranked second behind Hong Kong in the Economic Freedom Index in 2017. Singapore is one of the most liberal economies in the world. A major exception is the highly regulated housing market. The state also has an influence on economic events through the holding company Temasek, which is owned by the government. Temasek invests strategically in the country’s companies. Singapore is striving to become a biotechnology center in Asia. A*STAR, the Agency for Science, Technology and Research, a government agency, supports research capacities in Singapore. The newly created Biopolis is home to private and state institutes, biotech and pharmaceutical companies. The port of Singapore is one of the most modern and largest transshipment centres in the world. The Straits Times Index is the leading stock index on the Singapore Exchange.
Singapore is particularly important as an international financial centre and in wealth management, i.e. as a tax haven. In 2017, Singapore was ranked 4th on the list of the 17 largest tax havens in the world by the organization “Global Citizens”. Following the financial crisis in 2008/09, the volume of assets managed in Singapore doubled to around 2.5 trillion Singapore dollars by 2015. Some of these funds were invested in huge shopping malls, hotels and other local investments, so that overcapacities in trade are lamented. Since 2014, the banking sector has been in a phase of consolidation. Some European banks closed their subsidiaries. Singapore ranked 4th in a ranking of the world’s most important financial centres (as of 2018).
With 11.8 million foreign visitors in 2015, Singapore was one of the most visited cities in the world. Tourism is promoted by the government through marketing campaigns and generates billions in revenue every year. Singaporeans themselves are allowed to enter 159 countries without a visa, making Singaporeans the most powerful passport in the world, as Paraguay lifted the VISA restrictions on Singapore on 24 October 2017, putting Germany in second place with 158 countries.
According to Transparency International’s Corruption Perceptions Index, Singapore was ranked 6th out of 180 countries together with Sweden in 2017, with 84 out of a maximum of 100 points. Of all Asian countries, Singapore thus had the lowest level of corruption.
According to the Economist Intelligence Unit, Singapore will be the most expensive city in the world in 2014. In a ranking of cities according to their quality of life, Singapore ranked 25th out of 231 cities surveyed worldwide in 2018.
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