Singapore Crypto: MAS Regulation & Tax #2

Country facts

Singapore crypto score

Trade and store crypto

MAS licensing, zero capital gains tax, and Asia’s leading crypto hub

Singapore was number one on the Q4 2021 crypto-friendly ranking with its progressive crypto economy, but a few things have changed – perhaps due to its success. The hugely important Monetary Authority of Singapore (MAS) marks the country’s throttling back on the cryptocurrency accelerator by issuing firm guidelines that its crypto service provider community should not be allowed to offer its services to the general population. This falls some way short of an official ban but is more an attempt to curb the rise of interest in crypto amongst the population, and the risks involved which many people may be unprepared for -especially in view of recent price volatility.

Those service providers defined by the new measures, including banks, will fall under a wider definition of crypto services under the Payment Services Act, which takes in agencies providing custodial wallets and exchanges. Basically, advertising to encourage or promote crypto services is now seen as attracting consumers to trade without being aware of the risks.

The wide-ranging dampening of crypto promotions runs right across society, from public open areas and transport (outdoor media) to public websites, social media, and broadcasting – which pretty much covers everything. Left alone is the ability of crypto service providers to promote their services only on their own websites.

Current moves to protect Bitcoin investors have been initiated by The Monetary Authority of Singapore MAS which set out papers proposing regulatory measures to reduce the risk of consumer harm from cryptocurrency trading and to support the development of stablecoins as part of the cryptocurrency economy. The new proposals look to ensure that customers’ assets are segregated from s service providers’ own assets. Furthermore, as already taken place with a ban on third-party advertising of crypto services, cryptocurrency trading businesses cannot offer promotional incentives to attract retail customers, accept credit card payments or provide financing to retail customers.

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The Monetary Authority of Singapore is not looking to restrict the industry, but to reduce risks from money laundering, terrorism financing, technology, and cyber fraud. Stablecoins that are pegged to a single currency SCSs – where the value in circulation exceeds S$5 million, issuers must hold reserve assets in cash or cash equivalents which are at least equivalent to 100% of the par value of the outstanding SCSs in circulation. The assets must also be denominated in the same currency as the pegged currency. All SCSs issued in Singapore can only be pegged to the Singapore dollar or any Group of Ten (G10) currency.

Banks in Singapore will be allowed to issue SCSs with prudential requirements, however. Singapore has lost business to the United Arab Emirates following an earlier regulatory proposal

Having taken these measures – or whether it implements further ones, Singapore is still a leading crypto country and, as elsewhere, its government shows enthusiasm for blockchain technology and the potential it offers, but attempts to dampen encouragement for the trading of Bitcoin among the general public. Price volatility and risks, they feel may not be properly understood overall by non-professional individuals, or at least not properly conveyed in advertising.

There may be more to come in the pipeline regarding crypto legislation. Whether this will be a more balanced approach to raise awareness and moderate rather than moves to inhibit crypto trading remains open but wither may be forthcoming. At the moment this move helps to take Singapore off the top spot in the Coincub Q1 2022 ranking.

In keeping with maintaining its competitive position, Singapore offers firm but clear legislative guidance with a low tax on crypto earnings combined with a progressive attitude within the financial sector and lots of retail uptakes.

Bitcoin trading and crypto law in Singapore

Legal – existing crypto legislation

Bitcoin and other cryptocurrencies are recognized and accepted by the Singaporean government as legitimate. There is a strict requirement to follow laws and regulations. The country has embraced the concept of crypto and the Monetary Authority of Singapore has, like Sweden, been looking into forming its own e-money. As a major business centre, Singapore is keen to adopt the latest innovations and thinking in this area.

Legal – forthcoming crypto legislation

Singapore is actively assessing all aspects of crypto, such as trading services and blockchain technology.

Crypto financial services in Singapore

Fin services – retirement planning

Most retirement and pension funds worldwide deem cryptocurrencies to be too volatile to become part of long-term retirement schemes. There is little certainty on this at present.

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Fin services – banking

Singapore is highly advanced as a financial trading centre, and crypto and digital currencies are widely understood right from the top down including the possible adoption of an e-currency.

Fin Services – Defi

Decentralized Finance is behind the rapid interest and growth of cryptocurrency and is underpinned by blockchain technology. The central bank, the Monetary Authority of Singapore, is looking at new financial sector regulations including stronger standards for cryptocurrency service providers and higher requirements for technology risk management in financial institutions.

Using crypto in Singapore

Spending bitcoin in Singapore

Singapore is a very progressive country in its acceptance of crypto and there is a growing number of bitcoin ATMs across the country. You can spend popular cryptocurrencies like bitcoin and ether in a number of outlets and retailers, as well as on gift cards.

Gifting crypto in Singapore

The gains on your bitcoin will be subject to tax prior to gifting.

How to buy bitcoin in Singapore?

There are several ways to buy Bitcoin in Singapore.

1. One popular option is to use a cryptocurrency exchange, such as Binance, Coinhako, or Huobi. These exchanges allow users to buy and sell Bitcoin using their local currency, the Singapore dollar (SGD). To use an exchange like Binance, Coinhako or Huobi, you will first need to create an account and verify your identity. This typically involves providing a copy of your passport or national ID card, as well as proof of residence. Once your account is set up and verified, you can then link it to your bank account or deposit SGD, or other supported crypto or stablecoin as a deposit to make a purchase.
2. Another option is to use an Over-The-Counter (OTC) platform like Quoinex, where you can buy and sell Bitcoin directly with other traders, often at lower fees than through an exchange.
3. Lastly, some individuals or ATMs also sell Bitcoin for cash in person in Singapore, but it’s less common and also not as safe as using an exchange or OTC platform, as the price may be less competitive and there might be some risk of fraud. Speaking of which.

How to store your bitcoin in Singapore?

There are several ways to store your Bitcoin in Singapore, each with its own set of benefits and risks.

• hardware wallet, also known as a “hard wallet.” These are physical devices that look like USB drives and are used to store your Bitcoin offline. They provide an additional layer of security by keeping your private keys stored on the device itself, rather than on a computer or mobile device. Examples of popular hardware wallets are Ledger and Trezor.
• mobile wallet, which is a type of software that can be downloaded to your mobile device. These wallets allow you to store, send, and receive Bitcoin on the go. Popular mobile wallet options include Coinbase Wallet, Mycelium, and Trust Wallet.
• software wallet which is software that can be downloaded to your computer, you can use software such as Exodus, Electrum, or Bitcoin Core. These wallets allow you to store and access your Bitcoin on your computer, but it is still connected to the internet, so it may be less secure than a hardware wallet.
• paper wallet, which is a type of cold storage, you can use a service like Bitaddress.org to create a paper wallet where you’ll be given a public address and a private key, you can print this and store it in a safe location.

When it comes to storing bitcoin, it’s important to understand the security measures provided by each type of wallet, such as two-factor authentication and backup/recovery feature, and also make sure to keep your recovery seed or private key securely stored. Not your keys not your bitcoin is a phrase most bitcoin owners know very well, and there are several steps you can take to educate yourself and find out the strategy that works for you. Also, be aware of the regulations and laws in Singapore regarding crypto storage.

 

Crypto Exchanges

Best crypto exchanges in Singapore with MAS registration for Crypto exchange or Major Payment Institution licence:

NAME			RATING	FOUNDED DATE	DEPOSIT METHOD	BASED IN	REVIEW	SIGN UP
#1		Crypto.com	4.6	2016	Credit Card Bank Transfer	Singapore	Coincub Review	Register Now
#2		Coinbase	4.0	2012	Credit Card Bank Transfer	USA	Coincub Review	Register Now
#3		Revolut	4.0	2015	Credit Card Bank Transfer	London, UK	Coincub Review	Register Now
#4		Independent Reserve	3.82	2013	EFT bank transfers SWIFT transfers crypto Osko/PayID Credit/Debit cards and PayPal	Australia	Coincub Review	Register Now

#1 Crypto.com 4.6

Register Now

FOUNDED DATE2016

DEPOSIT METHOD Credit Card Bank Transfer

BASED INSingapore

Review

#2 Coinbase 4.0

Register Now

FOUNDED DATE2012

DEPOSIT METHOD Credit Card Bank Transfer

BASED INUSA

Review

#3 Revolut 4.0

Register Now

FOUNDED DATE2015

DEPOSIT METHOD Credit Card Bank Transfer

BASED INLondon, UK

Review

#4 Independent Reserve 3.82

Register Now

FOUNDED DATE2013

DEPOSIT METHOD EFT bank transfers SWIFT transfers crypto Osko/PayID Credit/Debit cards and PayPal

BASED INAustralia

Review

Crypto regulation in Singapore

Security in Singapore

Singapore is one of the leading players in regulating crypto and exchanges are firmly licensed and regulated by the country’s central bank, the Monetary Authority of Singapore. The combination of low tax on crypto and firm regulation makes Singapore an attractive place, but you’ll always need to check out what exchange suits your needs best and the levels of service, insurance, and protection they can offer individuals.

Transparency

You have plenty of choices for choosing exchanges, both overseas and home-based ones. In all cases, you’ll have to verify your email address and identity. Local exchanges all have to comply with central bank guidelines and reporting obligations.  You’ll possibly enjoy better customer support and protection with a locally based exchange whereas an established worldwide exchange may offer an increased range of features and services.

Taxes in Singapore

Bitcoin taxation in Singapore – Crypto Income tax Singapore

Tax is a subject never far away from bitcoin and other digital currencies. Put simply, any crypto that you purchase is treated as property, but if you trade it on a regular basis your gains will be subject to tax (17%)  The Inland Revenue Authority of Singapore (IRAS) is responsible for tax collection.

Tax relief

Basically, there is no capital gains tax in Singapore. So, if you’re buying bitcoin or another cryptocurrency and you make a gain in its value, there is no capital gains tax to pay when you sell. If you’re trading regularly – and that’s something you have to sort out – then the gains will be subject to tax.

Tax when moving residency

If you are a long-term resident of Singapore you have probably been deemed a permanent resident for tax purposes. If you are not a permanent resident, and your holdings are outside of Singapore you’ll fall under the required tax laws of your adopted country.

Tax on mining

Mining is a hugely expensive exercise in time and money and way beyond the scope of most individuals. In Singapore, mining is not illegal but the costs of doing it might outweigh your potential gains. You’ll also have to pay income tax on your hard-earned mined coins at 17%.