By now, Singapore has no comprehensive regulations except for the Payment Services Act on cryptocurrency activities aiming at money laundering, terrorism financing, and technology risks only. The recent “Guidelines on Provision of Digital Payment Token Services to the Public” issued by The Monetary Authority of Singapore(MAS) reflects the authority’s attitude towards cryptocurrency’s services conducted locally. The MAS doesn’t encourage the public, mainly retail investors, to engage in related trading activities.
Owing to the nature of cryptocurrency’s high risk, the MAS doesn’t recognize it as a legal currency and doesn’t protect investors or its holders from losses in value. Only 3 financial institutions have operating licenses to carry out digital payment tokens(DPTs) businesses in Singapore. The 3 institutions are DBS and the Australian Cryptocurrency Exchange-Independent Reserve.
Investors and businesses don’t need to pay capital gains taxes related to cryptocurrencies trading activities, including crypto mining, unless for commercial purposes. However, you must not hold more than S$5,000 in an e-wallet and convert more than S$30,000 for a fiat currency.
What More Must You Know About the Payment Services Act(PS) and the Guidelines Issued By the MAS Before Buying Cryptocurrency?
If you are interested in buying cryptocurrencies(also called digital payment tokens-DPT) like bitcoins, you should study the MAS’s guidelines for rights as an investor and asset security. Below are the highlights from the guidelines:
- Like any high-risk investment, you should be aware you may lose parts or all of your money as the prices of cryptocurrencies fluctuate in more tremendous leaps within a short period. The Monetary Authority of Singapore does not have any rules or regulations to protect investors.
- Besides 3 licensed institutions(DBS, FOMO Pay, and the Australian Cryptocurrency Exchange Independent Reserve), you may notice that some institutions are providing DPT trading services but have not been licensed with the MAS. They have been operating before the Payment Services Act of 2019 and should have the license exemption for a certain period before the MAS formally approves. You should check an institution’s legal status with the MAS if you intend to deal with one beyond the 3 licensed institutions.
- The MAS has banned all promotional and advertising activities in public areas, including public transport and related sites, broadcast media, periodical publications like newspapers, magazines, third-party websites, social media, other public events, and roadshows. Nevertheless, DPT services providers can promote businesses on official websites, social media accounts, and mobile applications but cannot join with third parties to solicit customers.
- DPT service providers should present clear statements about the risk of investing in DPTs like bitcoins with no intention of misleading clients to underestimate the investment risks. The merits of comments by the DPT service providers should be consistent with the rules regarding risk disclosures under the PS Act.
- The MAS stresses the use of Automatic Teller Machines(ATMs) to promote DPT services. DPT service providers should use ATMs to sell or buy DPTs because the MAS deems them public venues, and the machines may provoke a person to trade based on impulses and lead to irrational investing. As a result, you can no longer trade DPTs on ATMs.
- Related products derived from DPTs may involve more risks than cryptocurrencies. The contract-for-differences and futures contracts are underlying contracts basing values on a cryptocurrency’s price at a specified period. You may realize the investments carry more risks than a DPT.
- The MAS has no direct jurisdiction over the investments except that authorized exchanges carry the investing activities regulated by the Securities and Futures Act.
- Finally, the Monetary Authority of Singapore does not recognize DPTs as legal currencies. You cannot use them as a monetary payment in return for services or goods.
Steps in starting to invest in Cryptocurrencies in Singapore
Step 1: Select a cryptocurrency exchange: Besides 3 authorized exchanges, several institutions provide trading services to the public. They are exempted from licenses for a certain period because of their earlier operating history long before the regulations in 2019.
Apart from the legal status of bitcoin, you also should consider a DPT services provider’s financial background and capability concerning the operational experience and services provided. Cryptocurrencies are risky assets and may call for additional risks like operating efficiency and security if an exchange does not offer comprehensive services as a whole.
Step 2: Create a cryptocurrency exchange account: Most exchanges offer online account opening services, and the documents required are personal identification like an ID card, a passport, and proof of address. Some exchanges may accept the MyInfo system in opening an account.
In addition, you may need an Xfers account for dealing with some exchanges. A two-factor authorization and a trusted Wi-Fi network are proper procedures for secure transactions. You may have to register a bank account or credit card, debit card account for transactions.
Step 3: Upload required documents: The procedure for opening a cryptocurrency account is similar to a stock one. Like a standard protocol of a typical know-your-client process, you upload the personal identification documents to an institution’s server after getting all papers ready like a standard protocol of the know-your-client process.
Step 4: Fund your account: You have 2 ways to fund a crypto account after account approval. One is a direct transfer from your bank to your account with an exchange. The other is to fund your account with cryptocurrencies you possess. The time length it takes to complete a transfer is 1 to 3 business days.
Step 5: Buy Bitcoins or other cryptos: Once completing the funding, you can start trading. As investing involves risks and DPT investing is no exception, you should make sure digital currency investing and the asset pricing risks may cause huge losses due to the price fluctuations.
The following is a list of the most popular crypto exchanges in Singapore:
|Cryptocurrency Exchanges||Cryptocurrency Exchange Trading Fees||Number of Traded Cryptos||Invest in Bitcoins and Ethereum* using the Singapore dollars|
|Coinbase||0.5% to 2.5%||151||Yes|
|The Australian Exchange of Independent Reserve||0.5%||27||Yes|
*Bitcoins and Ethereum are the most popular and traded cryptocurrencies in Singapore. DBS crypto exchange is available to financial institutions, professional market makers, and family accredited investors.
Besides the trading fees and use of local dollars for investing in DPTs, you should know other charges like withdrawal fees; bid-ask differences to maximize investment profits.
How many ways to buy Cryptocurrencies in Singapore
Besides crypto exchanges, you still have other alternatives to investing in digital payment tokens. Here are the options you may consider:
- Peer-to-Peer cryptocurrency exchanges platform(P2P): P2P is an online platform where buyers and sellers deal with each other based on agreed prices, payment, or delivery methods. For trust and security, it is available to members only. The advantage is both sellers and buyers reduce middle-man costs and what they do is pay a small fee to post a sale. Yet, buyers and sellers may find it challenging to reach deals due to a lack of trust and possible defaults on promises made.
- Crypto derivatives: The investment tool bases its value on an underlying cryptocurrency, so crypto derivative prices may undergo massive price changes(if leveraged) due to price changes in a DPT. The derivative investments are listed and regulated on licensed exchanges. As the name implies, crypto derivative investing is riskier than crypto itself. You should review the investments thoroughly before making a decision.
- Buy a stock related to a cryptocurrency: “Buy Bitcoin” seems a trendy slogan for cryptocurrency investing; instead, investors can purchase stocks relating to the blockchain technology or crypto businesses like Coinbase Global(NASDAQ: COIN), Payment service companies like Paypal(NASDAQ: PYPL), the technology supporting companies like Nvidia(NASDAQ: NVDA) or DPT mining companies as Canaan(NASDAQ: CAN) and brokerage app: Robinhood(NASDAQ: HOOD), exchange operator: CME Group(NASDAQ: CME). You may also invest in a local crypto index ETF like the Amplify Transformational Data Sharing ETF(SGX: BLOK).
- Crypto exchanges: The channel is the most popular in Singapore. The direct investment tool appeals to investors as they can take a direct part in the business.
How to Secure Your Cryptocurrency
In addition to “Buying Bitcoin” or another DPT, you need a secure place to store it or risk being stolen or hacked. A secured personal cryptocurrency wallet is a safe virtual vault.
Two types of crypto wallets are available:
Hot Wallet: An exchange creates an online wallet system to buy bitcoins or other cryptocurrencies. The online wallet allows you to receive, send and record your cryptos. A crypto exchange provides you with 2 keys: one public and one private key to log in to your secure digital wallet so you can access your account. A public key is similar to an account username, and a personal name is the same as your password directing to your digital wallet.
A hot wallet’s advantage is you can gain quick and convenient access to your wallet by using the keys. Nevertheless, the online wallet is vulnerable to being hacked on your assets and personal data, especially when linking your computer to public Wi-Fi.
Cold Wallet: It is a way of offline storage for cryptocurrencies and a more secure digital wallet than the hot wallet. The reason is digital payment tokens are kept separate from the internet and stored on devices like computers, cellphones, or USBs. For sure, you should use a password to open a wallet to check your cryptos.
The advantage is extra security from online hackers. Besides, you can know your wallet information without going online. The cons are you may lose your wallet by losing or damaging the storage hardware. You may not trade some time as it takes time to recover the wallet. At the same time, you have to put your cryptos online and incur risks if you need to trade.
More You Need to Know
Can I Invest through a Bitcoin ATM now?
The Monetary Authority of Singapore(MAS) has stated, in a recent guideline dated Jan 17, 2022, cryptocurrency service providers should no longer promote businesses and solicit clients in public areas, including automatic teller machines(ATMs). An ATM is a focus point by the MAS and is viewed as one of the public areas.
The authority’s rationale is that people will make reckless decisions when investing through ATMs, which may lead to unexpected huge losses. You should do thorough research before investing in crypto.
Will Binance shut down operations in Singapore?
Binance, one of the largest cryptocurrency exchanges, withdrew its application from the MAS and is shutting down business in an orderly manner. Analysts say the shutdown is due to more stringent scrutiny by governments worldwide, including Singapore’s. They predict it is becoming more challenging to get a license nod from the MAS.
Meanwhile, only 3 licensed crypto exchanges operate DPT businesses in Singapore: DBS Vickers Securities, FOMO Pay, and Independent Reserve of Australia. The others are on the stage of applying for licenses and within an exemption period granted by the MAS.
How many types of cryptocurrency are there currently?
There are more than thousands of DPTs around the world. Yet only 12 types are the most popular and widespread. Here are the most widely traded cryptos by their market caps.
1. Bitcoin(BTC): The digital coin has been the most talked-about and invested DPT worldwide since its 2019 debut. Investors have been fascinated with it, not until 2017. The current market value is about USD800 billion.
2. Ethereum(ETH): Ether is the second most popular crypto investment tool in the virtual currency world. Ethereum is noted for smart contract investments. The current market value is about USD350 billion.
3. Tether(USDT): Investors call it a Stablecoin because the currency’s price pegs itself at USD1 per coin. Due to the US dollar peg, investors use Tether as a medium to convert one cryptocurrency into another rather than dollars. Others use it as short-term unsecured debt. The current market value is about USD75 billion.
4. Binance Coin(BNB): Binance, the largest crypto exchange, issues the DPT. Holders use it to pay for goods and services. The current market value is about USD70 billion.
5. USD Coin(USDC): Also labeled as a Stablecoin for USD1 per coin, its founder claims a reserve backed up for an equivalent amount of USD Coins are in the US regulated institutions. The current value is about USD50 billion.
6. Cardano(ADA): The name “Cardano” stands for the trading platform for the crypto – ADA. Like Ethereum, it is popular for its smart contract tools among investors. The currency value is about USD38 billion.
7. Solana(SOL): Founded in 2018, SOL is innovative in speedy transactions and a vigorous “web-scale” platform. Solana caps its issue number at 480 million.
8. XRP(XRP): Created in 2012 and formerly named “Ripple,” the crypto bearers use it to make cross-border transactions. The current market value is about USD35 billion.
9. TERRA(LUNA): Terra is a platform for crypto-LUNA’s trading activities. The trading platform also stabilizes stablecoin’s pricing by using technical means. Besides, it supports smart contract trading.
10. Polkadot(DOT): Established by Ethereum inventors, the DPT connects blockchain technology from different cryptocurrencies. The current market value is around USD22 billion.
11.Dogecoin(DOGE): What distinguishes it from others is its unlimited issuance of coins. It serves to pay and send as money.
12. Avalanche(AVAX): The platform facilitates fast and low-cost smart contract trades and supports custom blockchain creations. The system also focuses on creating decentralized apps. The tokens produced by it are AVAX. The current market value is about USD20 billion.
Is Bitcoin Blockchain technology anonymous for You?
Yes, a Bitcoin blockchain is a public financial ledger recording transaction details that every bitcoin account holder can see. Nonetheless, You don’t need a name, email address, or other personal identities to create a bitcoin account or wallet.
Therefore, fund holders’ identities are not visible on the system, and no one knows who executes the transactions. And passwords are the only access to your account. Too, you may add more security to your funds by creating more bitcoin wallets for multiple purposes.
Bitcoins and other cryptocurrencies offer new options to investors to create wealth. You may run the risk of vast losses due to massive price swings. In addition, few rules regulate the field, so it has led to numerous bitoin scam cases. You should invest in trusted institutions only and do more research before investing.
- Only 3 licensed cryptocurrency exchanges operate DPT businesses in Singapore.
- Cryptocurrency investing, including payment token derivatives(PTDs), is high-risk work.
- You should do due diligence before making a decision.
- Deal with your trusted institutions for DPT trades.
- You cannot buy bitcoins at ATMs in Singapore.
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