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FUND MANAGEMENT

Crypto Investments in Singapore: A Comprehensive Guide

May 2022

Andrew Macintosh

Did you know that 93% of Singaporeans have heard the term cryptocurrency? This proves that the digital tokens are no longer an asset class known only by a few early adopters — it has gone mainstream. The total of cryptocurrency assets increased 13 times in 2021, rising to US$1.48 billion from only $110 million the year prior, showing that the interest in cryptocurrency is not fading away anytime soon.

One of the leading banks in Singapore, DBS Private Bank, even released a trust solution for cryptocurrencies to let their customers have exposure to cryptocurrency in their wealth portfolio. They are the first bank in Asia to offer such a solution. Meanwhile, those with a lower amount of wealth may unlock the cryptocurrency world via several digital exchanges available in the Merlion city, such as Bitmex, Zipmex, and Coinbase. These platforms allow you to feel the thrill of owning cryptocurrency at a minimal cost.

Registering to these exchanges in Singapore means that you have cryptocurrency in your wealth portfolio. Doing so gives you the following benefits:

 

1. Enormous returns

During the 2008-2009 period, you could buy one Bitcoin for less than a dollar. Fast forward to a decade later, your Bitcoin is worth more than US$60,000; that’s thousands of percent in gains. Even if you invested in January 2021, you’d still get a 108% return during its peak in November 2021 with a price of US$ 68,000.

Since its inception, Bitcoin has proven to be the best performing asset class of the decade, with an annualised return of 230%, which is 1,000% more than the second-best performing asset class, the Nasdaq 100, with 20%. These figures show that if you have the patience and long-term horizon, your future self may just thank you for dabbling in cryptocurrency when given the chance. 

 

2. Portfolio diversification and inflation hedge

Investing in cryptocurrency means diversifying your wealth portfolio and not depending on one asset class to gain returns. As a relatively new asset class, bitcoin and its friends’ price action and trajectory are largely independent. They’re a non-correlated asset, differing from stocks and bonds.

Additionally, several cryptocurrencies such as Bitcoin, Monero, and Litecoin have a limited supply, meaning as it becomes more scarce, the price will surely go up, similar to gold. As of this writing, 19 million Bitcoin have been mined out of a 21 million cap. This is in stark contrast with paper money that can be printed anytime, leading to inflation in the years to come.

 

3. Online 24/7

Unlike the stock market, which has a schedule, cryptocurrencies are available at any time of day. You can purchase or sell as you wish, whether breakfast, lunch, or 2 AM. Most cryptocurrency exchanges will have live chat support 24/7 to tend to your every need.


How to begin your crypto adventure?

Setting up an account in a crypto exchange platform is relatively simple if you have a mobile device, internet, personal identification card, and bank account details. While there are many exchange platforms available, creating an account is the same regardless. The only difference is the features offered and their selling or buying fee.

Every exchange platform must comply with MAS guidelines when onboarding a new investor or customer. They need to have a Know Your Customer (KYC) procedure to verify that the customer exists. Additionally, they need to have a bank set up for transfer or withdrawal purposes.

It’s common for customers to submit their identification card and take a selfie during the application process. They need to fill out a form asking for their name, address, means of funds, and banking details. The approval process will take 24 hours to a few days. Once approved and verified, customers can deposit their funds in the exchange platform and purchase the digital token they want.

You can also get a license to start a crypto investment business, or think about how to be an accredited investor.


The regulations of cryptocurrency

Singapore prides itself as one of the leaders in technological innovation in the region, and it’s no different when dealing with cryptocurrency. During Bitcoin’s first hyperbolic run, which peaked in December 2017, MAS released a press release warning the public that investing in cryptocurrencies is a highly risky and volatile asset, given its speculative nature. Deputy Prime Minister Tharman Shanmugaratnam also stated that Anti-Money Laundering (AML) and Combatting the Financing of Terrorism (CFT) measures that apply to traditional fiat currency should also apply to cryptocurrencies.

In 2019, the Payment Services Act 2019 (PSA) was passed, putting cryptocurrency and exchange platforms under the Monetary Authority Singapore (MAS) regulations. They must comply and obtain a licence to operate in Singapore. MAS has not recognised Bitcoin and others as legal tender in transactions but rather as goods, so a Goods and Service Tax is applicable when transacting Bitcoin.

Similar to other businesses in Singapore, to obtain a licence and be operational, a crypto exchange or platform must be incorporated with the Accounting and Corporate Regulatory Authority.

Afterwards, the business should ensure that they have implemented the right policies to diminish the chances of the money obtained by the company being used for illicit activities, such as money laundering or funding terrorism. After one feels they have put in the adequate measures, they may contact MAS to request an assessment on the following areas:

 

  1. Risk assessment and risk mitigation

  2. Customer due diligence (CDD).

  3. Reliance on third parties

  4. Correspondent accounts and wire transfers

  5. Record-keeping

  6. Suspicious transaction reporting.

  7. Internal policies, compliance, audit and training

 

For an in-depth explanation, please read the official document here.


There’s no denying that the rise in crypto users and adoption is in no small part due to the extensive marketing that several exchanges and trading platforms have deployed. One strategy includes utilising influencers or celebrities to promote certain exchanges or cryptocurrency. Essentially, such approaches are used to attract novice investors to the crypto bandwagon, even as MAS has warned that it’s not suitable for the general public.

It’s an open secret that celebrities and influencers have a considerable following and name recognition. Their actions and words can influence their fans or followers, blindly trusting what the influencer says. For this reason, paying an influencer or a celebrity may be an effective way to reach the widest audience possible.

Hollywood celebrities, including Paris Hilton and Lindsay Lohan, have promoted crypto and exchanges on their social media. Larry David, the star of the HBO sitcom “Curb Your Enthusiasm”, even starred in a Super Bowl ad, the largest sporting event in the US that guarantees hundreds of millions of eyeballs.

Hitting closer to home, Foris DAX Asia, which operates the Crypto.com trading platform, had been using Matt Damon in its advertisements, played at cinemas across the state. In the promotional video, he muttered the tagline, “Fortune favours the brave”.

MAS issued further guidelines in January 2022 to avoid such incidents from occurring again, curbing the promotion of cryptocurrencies to the public. Under the new guidelines, cryptocurrency businesses should not engage in marketing or advertising activities in public areas in Singapore, such as on public transport, public transport venues, public websites, social media platforms, broadcast and print media, or provision of physical ATMs. They’re also prohibited from engaging a third party, such as social media influencers, in promoting their services.

MAS Assistant Managing Director (Policy, Payments and Financial Crime), Ms Loo Siew Yee, said, “MAS strongly encourages the development of blockchain technology and innovative application of crypto tokens in value-adding use cases. But the trading of cryptocurrencies is highly risky and not suitable for the general public. Service providers should therefore not portray the trading of cryptocurrencies in a manner that trivialises the high risks of trading in DPTs, nor engage in marketing activities that target the general public.”


Risks associated with cryptocurrency

Investing in cryptocurrency has many risks that you have to be aware of. Here are a few of them:

 

1. Crypto is highly volatile

Yes, crypto can give you enormous returns in days or months, exceeding that of stocks or bonds, but the same principle is also applicable to the downside. You can lose all your capital in weeks or days, even hours. Therefore, it’s wise not to put all your money into crypto; use buffer money you don’t mind losing. Don’t use your rent money or other necessities.

 

2. Crypto is vulnerable

While crypto prides itself on not being able to be counterfeited or double-spend, touted as features that ensure security, there have been numerous instances where crypto exchange platforms have been hacked, resulting in the loss of up to millions for investors. Additionally, MAS doesn’t offer reimbursements if one’s cryptocurrency is stolen or misused. It all comes back to how much you can afford to lose in this new investment.

 

3. Crypto is a speculative asset

Unlike stocks that have a tangible output or product, cryptocurrency is intangible and only exists in the virtual realm. There’s no output that you can see in the physical world. There’s no fundamental base its price is based on; it’s just based on the supply and demand of society and their willingness to pay the given price.

As the new kid on the block in the investing space, cryptocurrency promises several benefits that may attract investors to it, but please keep in mind that the benefits also come in tandem with some risks. Therefore, MAS has implemented regulations that protect customers’ interests and keep companies’ business intentions and practices secure and compliant. There’s also several ways to mitigate the risks of cryptocurrency investments.

Remember, though, the responsibility to be vigilant to the evolving world of digital tokens is not solely on MAS’s shoulders but on the investors themselves, meaning they have to stay informed about where their investments are going.


Regardless of your cryptocurrency choice, Lanturn is ready to assist you in making the right financial decision based on your needs and goals. As one of the leading technology firms that provide end-to-end financial services and solutions for businesses, Lanturn has a proven track record in fulfilling every client’s needs. This includes helping clients navigate the brand new world of cryptocurrency. Our certified and experienced team is ready to advise you every step of the way.

Want to start your consultation today? Contact us now

Watch our recent webinar on crypto investments as a beginner’s guide.

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