Singapore is one of the most favorable destinations for setting up a company, whether by a foreign or by a resident of Singapore. Other countries have their specific cryptocurrency license. Earlier in Singapore, there was no such license for cryptocurrency. But there was a new regulation implemented by the Monetary Authority of Singapore for all cryptocurrency businesses on 28 January 2018 that they are required to have a new payment institution license.
Singapore is always a favourite destination for many investors because of its taxation system, trade connections, and many more. The business is related to the cryptocurrency in the fintech sector in Singapore.
Singapore is one of the world’s countries with cryptocurrency and blockchain industries. Most small and medium-sized companies operate in this particular field of business. Many experts will help to set up a cryptocurrency business in Singapore.
In this article, we will discuss in brief the procedure for setting up a cryptocurrency company in Singapore and the documents required for it. So, without any further ado, let’s begin.
Who governs cryptocurrency companies in Singapore?
The Monetary Authority of Singapore is the main regulatory authority to regulate financial-related businesses. This authority also creates the business of cryptocurrency in Singapore. In the year 2017, the Monetary Authority of Singapore started with the creation of cryptocurrency businesses. They had created the legal framework for the dealers of cryptocurrency and those who want to set up cryptocurrency funds.
Foreign investors are also attracted to investing in cryptocurrency in Singapore as it is among the few countries that have associations of cryptocurrency and blockchain industries.
Trading platforms for cryptocurrency
In Singapore, there are many trading platforms for cryptocurrency such as Coinbase, Coin Hako Paxful, Local Bitcoins, Coin mama, and many more. For trading in cryptocurrency, one can either buy it or exchange it.
To start a trade, one must have an account, and after that, one can start buying cryptocurrency. One can pay for buying by using PayPal, a debit card, a credit card, or a bank transfer, and these also attract a charge. One must go for the cheapest payment method. These platforms charge commission.
Regulations For Cryptocurrency Companies In Singapore
An investor who wants to set up a cryptocurrency company in Singapore must comply with the regulations formed by the Monetary Authority of Singapore.
Some regulations are mentioned below-
- The guide to digital token offerings. It was formed by the Monetary Authority of Singapore in 2017.
- The guidelines on regulations of cryptocurrency trading and markets.
- The anti-money laundering regulations. It is one of the most important regulations for businesses of cryptocurrency.
The futures and securities act. In this act, money is treated as a commodity for trade.
Different Forms of Cryptocurrency Companies
The different forms of cryptocurrency companies are:
Cryptocurrency exchange
Cryptocurrency exchanges are online marketplaces where individuals may purchase, offer, and transfer cryptocurrencies. In accordance with the market valuation, dealers will make purchases or sales of digital goods for either additional digital assets or in exchange for fiat currency.
Cryptocurrency wallet
Cryptocurrency wallets are software programs that permit users to safely keep their cryptocurrency holdings. The private and public keys of an individual are kept in such programs. A person can send electronic assets out of their wallet using a private key, whereas they are able to get them using a public key.
Requirements For Setting Up a Cryptocurrency Company in Singapore
If an investor wants to set up a cryptocurrency company in Singapore, then firstly, he/ she is required to register for a business structure that is recognized by the commercial field. They are required to have a special license for a cryptocurrency company. But in the case of IT companies, there is no requirement for a license to issue a cryptocurrency.
All cryptocurrency companies must comply with the anti-money laundering regulations set by the Monetary Authority of Singapore. These regulations protect the investors and clients who acquire cryptocurrency funds. Failure to comply with these regulations may result in a fine of S$25000 and striking by the company.
This is required to have at least a local executive director, a local compliance officer, a local registered address, and a paid-up capital of S$100000.
It is the new type of financial nature business in Singapore. The government of Singapore has made some inventions to help them in opening local bank accounts for cryptocurrency. They bring cryptocurrency companies and banks together for better compliance. There is a need for the interface of government because there were complaints that banks were closing the accounts whose businesses are at a grinding halt.
License Requirements for Setting Up Cryptocurrency Company in Singapore
A cryptocurrency exchange is the most common type of business Cryptocurrency in Singapore. For conducting this business, platforms are required to be licensed by the Monetary Authority of Singapore.
There are a few conditions for licensing a cryptocurrency company in Singapore.
These are-
- The company must be registered in Singapore.
- There must be a prospectus prepared by the company that shows the token to be traded.
- There must be an offer of inviting not more than 50 private companies in a year by that particular company.
Advantages Of A Cryptocurrency Company in Singapore
There are many benefits to setting up a cryptocurrency company in Singapore. Some of them are stated below.
1. Ease in conducting business
Singapore is considered the 2nd most favorable destination for setting up businesses according to the survey of 2020. It provides many facilities to business owners such as a short period in incorporation, better infrastructure, and many more.
2. Governed by the Monetary Authority of Singapore
In Singapore, there is no requirement for a cryptocurrency license. Instead, they are required to apply for a payment institution license. The Monetary Authority of Singapore (MAS) created this licence, and all associated enterprises must adhere to its terms in order to operate a cryptocurrency commerce using a Singapore corporation.
The Monetary Authority of Singapore (MAS) has taken the initiative to create a regulatory environment for virtual currencies and assets that offers transparency and assurance to companies that operate in this market.
3. Government support
The government provides massive support for setting up a cryptocurrency company in Singapore. It has invested more than S$1 billion in financial technology structures.
4. Banking facilities
The banks of Singapore are regulated and supervised by the Monetary Authority of Singapore. These banks also provide a bank account for cryptocurrency.
5. Highly skilled labor
In Singapore, there is a highly-skilled workforce and talents. The nation additionally boasts a strong network of fintech businesses and incubators, allowing cryptocurrency businesses to utilize an array of tools and assistance.
Disadvantages Of A Cryptocurrency Company In Singapore
There are many benefits to having a cryptocurrency company in Singapore, but there are also some disadvantages. These are mentioned below.
- A local person is required to set up cryptocurrency in Singapore. The license is granted only to serious business owners.
- In Singapore, some banks are still reluctant to onboard cryptocurrency companies.
- It takes 4 months to incorporate cryptocurrency companies in Singapore.
- Taxation of cryptocurrency-related activity in Singapore
- In Singapore, cryptocurrencies have been permitted for a while, despite not being subject to severe tax laws. Nevertheless, as the sector has grown, Singaporean crypto businesses are now required to contribute income tax, which is assessed at a fixed rate of 17%.
From a tax perspective, Singapore also has a number of advantages, the most significant of which is that this kind of earnings is not subject to either capital gains tax or sales tax. Although such services are often subject to a 7% GST, using virtual currency as payment is free from this tax.
Conclusion
Setting up a cryptocurrency company in Singapore offers numerous advantages for entrepreneurs looking to enter the rapidly growing blockchain and cryptocurrency industry. With a robust regulatory framework established by the Monetary Authority of Singapore (MAS), businesses can operate with transparency and assurance. The country’s favorable tax environment, government support, and highly skilled labor force make it an attractive destination for cryptocurrency ventures.
While challenges like the need for local directors and the time-consuming incorporation process may exist, the overall business climate remains highly favorable. By adhering to the licensing requirements and regulations, investors can unlock the full potential of the cryptocurrency sector in Singapore, positioning themselves for long-term success in this dynamic industry.
