This move underscores the nation’s dedication to preserving a secure and reliable financial ecosystem.
As part of this initiative, the Monetary Authority of Singapore (MAS) has updated the national risk assessment for terrorism financing. The latest assessment raises the risk level for cryptocurrency exchanges from medium-low to medium-high. This measure is designed to prevent the misuse of Singapore’s economic openness by criminal and terrorist entities.
In line with the revised regulations, cross-border online payments continue to be classified as high-risk, due to their potential for facilitating illicit activities. The update serves to enhance vigilance against the exploitation of Singapore’s status as an international financial, commercial, and transportation hub.
The heightened scrutiny presents a new challenge for cryptocurrency platforms, coming shortly after a prior report identified digital payment tokens as high-risk. The MAS's updated national assessment on money laundering highlights the substantial risks associated with digital payment token (DPT) service providers.
In response, the MAS has expanded the regulatory oversight of digital payment services to include DPT providers. This expansion allows for the imposition of more stringent anti-money laundering (AML) and counter-terrorism financing (CFT) measures, thereby ensuring user protection and financial stability. The regulations now enable DPTs to offer custodial and transfer services for cryptocurrencies, reinforcing Singapore's commitment to a secure financial sector.
Singapore has emerged as a key player in the global cryptocurrency ecosystem due to its progressive regulatory stance and supportive environment for fintech innovation. The country’s regulatory framework for digital assets is among the most comprehensive in the world, which has attracted numerous cryptocurrency exchanges and fintech companies to establish their operations in Singapore. This favorable environment has made Singapore a significant hub for digital assets, fostering both innovation and regulatory compliance.
Despite the regulatory tightening, Singapore maintains its position as a pro-cryptocurrency nation, with a higher-than-average adoption rate of 11.2% compared to the global rate of 4.2%. In Singapore, digital currencies are recognised as digital payment tokens, with Bitcoin and Ether officially given legal status.
Meanwhile, Chinese artificial intelligence startups are increasingly choosing Singapore as their base for global expansion. This trend is driven by the need to circumvent escalating geopolitical tensions between China and the US, which have restricted access to funding and advanced technologies.
Relocating to Singapore provides these startups with broader market access and easier international financing, facilitated by a more favourable regulatory environment. This strategy, often referred to as ‘Singapore-washing’, allows companies to detach from their Chinese origins and avoid scrutiny from countries critical of China.
Singapore’s conducive business environment and strategic location as a bridge between Asian and global markets have made it an attractive destination for Chinese AI firms. By the end of 2023, Singapore had become home to over 1,100 AI startups, many originating from China, reflecting a significant shift in the global tech landscape.
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