July 16, 2024

Is Singapore going to be the next major hub for Bitcoin ETFs?

April 02, 2024
5Min Reads

Is Bitcoin becoming more and more popular in Singapore as a result of US approvals? What information about Singaporeans' interest in Bitcoin ETFs does a recent study provide?

A major factor in Singaporeans' growing acceptance of Bitcoin (BTC) is recent events in the United States.

In light of the U.S. Securities and Exchange Commission's (SEC) approval of spot Bitcoin exchange-traded funds (ETFs), 39% of the public has shown interest in Bitcoin, according to a recent poll conducted by Independent Reserve, a Singaporean cryptocurrency exchange.

The legalization of spot Bitcoin ETFs has sparked institutional investments, which is what Lasanka Perera, CEO of Independent Reserve Singapore, believes is responsible for the spike in demand for Bitcoin. He declared:

51% of Singaporeans are aware that spot Bitcoin ETFs have been approved by the SEC, indicating a high level of awareness in the interim. Furthermore, because Singapore lacks such products for regular investors, 33 percent of respondents are thinking about making an investment through foreign offerings.

Meanwhile, 48% of Singaporean cryptocurrency investors intend to grow their holdings of Bitcoin over the course of the upcoming year as the April Bitcoin halving event draws near. What's really interesting is that 68% of investors with more than 50% of their portfolio in cryptocurrency plan to grow their Bitcoin holdings.

The survey also demonstrates the intelligence of Singaporean investors, who own more varied portfolios and have more than three years of market experience (52%).

Furthermore, 52% place a high priority on portfolio diversity, a sign of rising trust in cryptocurrencies as a substitute asset class.

Nonetheless, because crypto exchanges offer more trading opportunities and lower fees than ETFs, 75% of Singaporeans would rather invest directly in Bitcoin.

Singapore's regulatory framework and cryptocurrency adoption

The Monetary Authority of Singapore (MAS) warned Singaporean retail investors not to explore spot Bitcoin ETFs in foreign markets in January 2024.

Spot Bitcoin ETFs have not been accepted as acceptable assets for collective investment schemes (CIS), at the same time that such funds have just been recognized in the United States, according to MAS press release.

In order to protect retail cryptocurrency investors, the MAS also enacted new regulations in November 2023 that forbade companies from providing incentives such as free tokens upon registration. By preventing such incentives, the regulator hopes to protect consumers' judgment when they use cryptocurrency services.

In order to limit easy access to debt finance, firms are also prohibited from accepting locally issued credit cards and from offering margin or leverage transactions.

Singapore is seeing an increase in cryptocurrency use cases in spite of governmental measures.

Users in Singapore can now pay with cryptocurrencies like Bitcoin, Ethereum, and other ones using Grab, a well-known super app.

This development, made possible by Triple-A, Grab's cryptocurrency payments partner, indicates that cryptocurrency is becoming more widely accepted as a valid form of payment for daily activities like food delivery and ride-hailing.

Additionally, Singapore's cryptocurrency exchanges are receiving regulatory approval, a sign that the city-state is becoming a major hub for cryptocurrencies in Asia.

OKX's Singaporean affiliate is now able to offer cross-border money transfer services and digital payment tokens thanks to in-principle approval for a payments license.

Another significant exchange, Upbit, has shown its dedication to providing retail and institutional clients with services within Singapore's expanding digital ecosystem by obtaining a full license.

Singapore's progressive use of DeFi, staking, and tokenization

In June 2023, MAS revealed its position on asset tokenization and decentralized finance (DeFi) integration within existing financial systems, marking a step towards adopting cryptocurrency.

The publication of "Project Guardian: Enabling Open & Interoperable Networks" analyzes ways to digitize physical assets and explores the extensive potential of DeFi.

Large financial institutions such as HSBC, Marketnode, UOB, and UBS Asset Management undertook trials that demonstrated improved customization, wider distribution, and shorter trading times and expenses.

In a related development, a research conducted in February 2024 by Coinbase and Seedly shows that Singaporeans are using staking services more frequently.

38% of respondents used DeFi programs, while about 55% of respondents said they used staking services through centralized exchanges.

At 56%, this trend indicates a positive outlook for the long-term prospects of cryptocurrency as the financial industry's future.

Is Singapore going to be the next major hub for Bitcoin ETFs?

Singapore's approach to investing in cryptocurrencies is indicative of its ascent to prominence as an Asian fintech hub.

A secure environment for crypto projects is provided by well-defined legislation, most notably the Payment Services Act of 2019, which guarantees investor protection and market integrity.

The ecosystem is also supported by government initiatives, which also assist firms in smoothly adjusting to regulatory changes. Examples of these initiatives include blockchain pilot projects and exemption periods for digital payment token services.

Notwithstanding certain obstacles, such as the demise of regional cryptocurrency ventures like Terraform Labs and Three Arrows Capital, Singapore continues to be a desirable location for cryptocurrency pursuits.

Moreover, it attracts cryptocurrency investors and businesses due to its robust digital infrastructure, ease of doing business, and lack of capital gains tax. Startups benefit from the government's backing and easy access to venture capital, which draw in further investment.

With over 11% of worldwide investments, Singapore became a prominent hub for blockchain and cryptocurrency venture capital fundraising by the end of 2023.

Analysts credit a number of reasons for this spike, such as the demise of the FTX cryptocurrency exchange and the devaluation that followed by US-based cryptocurrency firms.

Furthermore, Singapore's standing as a center for tech innovation is reinforced by its standing as a Web3 developer talent hub, fueled by programs like as the Smart Nation Initiative.

Thus, the idea behind Singapore's spot BTC ETFs appears promising. Even while Singaporean investors now favor direct cryptocurrency investments, the launch of cryptocurrency exchange-traded funds (ETFs) may increase accessibility to digital assets and attract a larger pool of investors.

Singapore's status as a financial and cryptocurrency powerhouse in Asia could rise if rules change with an emphasis on striking a balance between investor safety and innovation, making it a top destination for cryptocurrency exchange-traded funds (ETFs).

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