SINGAPORE EMERGES AS CRYPTO-CURRENCY HUB
Wider acceptance for bitcoins expected with formation of the Association of Crypto-Currency Enterprises and Start-ups
By Jamari Mohtar
Focus Malaysia | June 21, 2014
IN the beginning, there was the first Bitcoin ATM in Asia, which was installed in Singapore in late February by Tembusu Terminals, a start-up bitcoin vending machine manufacturer based in the republic.
However, Tembusu ATM and the six others that were installed soon after allow one to only purchase bitcoins, giving rise to the term “cash-in” ATM.
But the eighth terminal, which debuted in Singapore in late March, marked the city-state’s first “cash-out” Bitcoin ATM because the machine can process the selling of bitcoins and dispense Singapore dollars to the seller, prompting David Moskowitz of Singapore broker Coin Republic to say: “I know a lot of enthusiasts have been looking for a convenient way to sell their bitcoins for local currency. This machine allows you to get your cash quickly using a very familiar ATM interface.”
The machine also allows users to purchase bitcoins using Singapore dollars just like the other seven ATMs.
And then in late April, Singapore-based Bitcoin payments system startup CoinPip brought US-based 37coins’ SMS bitcoin wallets to Singapore in a bid to make bitcoin transactions simpler for the public.
With an SMS bitcoin wallet, users can send text messages with commands to manage the wallet, such as instructing it to “buy” bitcoins from a list of bitcoin sellers in the same country, or enquiring about the wallet’s balance of bitcoins.
This was followed last month by another development when one more Singapore-based bitcoin start-up, 8pip, introduced what it claims are the world’s first bitcoin prepaid cards. These were launched at Startup Asia Singapore 2014 on May 7.
8pip’s bitcoin prepaid cards allow customers to purchase bitcoins by buying physical cards, and then redeeming the card’s equivalent value in bitcoin currency online at the CardToCoin website. As soon as customer details are keyed in, bitcoin funds will promptly be transferred to the customer’s bitcoin wallet.
To top it all off, this month an Association of Crypto-Currency Enterprises and Start-ups, Singapore (ACCESS) was unveiled, a further boost for digital currencies in Singapore.
In a statement on June 16, the Association – consisting of 14 start-ups in the crypto-currency industry – said its mission is to facilitate the legitimate use of crypto-currencies in Singapore with a vision to promote Singapore businesses using crypto-currencies and lower the cost of business transactions.
Formed on May 30 last year, ACCESS has, among others, the following objectives:
- To promote Singapore globally and industry-wide as the premier location for the development of businesses and services built upon crypto-currency platforms and technologies, supported by a regulatory framework that balances the necessity for innovation with the duty to protect the interests of consumer end-users and commercial entities engaging with this industry, and
- To promote the development, dissemination and adoption of best practices by Singaporean digital currency businesses and other industry participants, and to counter illegitimate use of the technology.
ACCESS is registered society with the Registry of Societies under the Ministry of Home Affairs (MHA) and represents various businesses in Singapore’s bitcoin and other crypto-currency ecosystem. These businesses include exchanges, merchant transaction services, vending machines, and miners.
Says ACCESS’s chairman Anson Zeall: “ACCESS aims to provide an open and clear dialogue between Singapore crypto-currency businesses and the wider public, including regulators.
“We will help facilitate an ecosystem where Singapore can be a hub for crypto-currencies businesses to grow and create jobs related to this new and growing technology.”
Analysts say that the existence of ACCESS, revealed publicly a year after its establishment, reflects the momentum and confidence the industry is gaining in the city-state, after much bad publicity about bitcoins in the aftermath of the Liberty Reserve scandal that coincided with the formation of ACCESS last year.
In that scandal, US authorities uncovered a conspiracy to commit money laundering and the operation of an unlicensed money-transmitting business; Liberty Reserve is alleged to have played a key role in laundering the proceeds from the theft of about US$45mil from two Middle Eastern banks.
It is alleged that part of the scam involved a Dominican Republic gang-member depositing thousands of dollars of stolen cash into two Liberty Reserve accounts via currency centres in Siberia in Russia and Singapore.
That probably explains ACCESS’s low profile over the past year.
While most enthusiasts and proponents of bitcoins seem to fear regulations, ACCESS was smart enough to use the difficult circumstances to engage in a quiet diplomacy with Singapore authorities. It is understood that the Singapore’s Inland Revenue Authority came out with enlightened tax guidance on bitcoins in January after some consultation with and feedback from ACCESS.
In March, the Monetary Authority of Singapore (MAS) revealed legislation that requires virtual currency intermediaries buying, selling or dealing in virtual currencies to verify the identities of their customers, to prevent money-laundering and financial support of terrorism. They are also to report suspicious activities to the MAS.
“Singapore, like most jurisdictions, does not regulate virtual currencies per se, as these are not considered as securities or legal tender. MAS’ regulation of virtual currency intermediaries pertains specifically to the money laundering and terrorist financing risks they pose,” MAS said then.
“It does not extend to the safety and soundness of virtual currency intermediaries nor the proper functioning of virtual currency transaction.”
Bitcoin start-ups thriving in island state
BITCOINS have the tendency to resurface optimistically after one has pronounced them dead from drowning in a sea of criticism. They have survived the suspicion of those distrusting an investment without a physical form. They’ve also triumphed over the bashing of mainstream economists such as Nobel Laureate Paul Krugman for their lack of “intrinsic value”.
They have also emerged unscathed by recent criticism of being volatile, when their value soared from a mere US$13 in January last year to well over US$1,200 in early December – almost a 9000% increase – and the collapse early this year of Mt Gox, the Tokyo-based bitcoin exchange. Their value has now stabilised at US$598.
One potential for bitcoin is in transforming the way money is sent across the world, by reducing transaction speeds from a few days to a few seconds. However, one of the major hurdles for bitcoins is in converting the crypto-currency into local currencies after receipt.
Hence, the introduction of bitcoin prepaid cards by Singapore-based 8pip. The prepaid card has the effect of vastly increasing liquidity and convenience for holders of bitcoin, considering that bitcoin ATMs are few and far between, and bitcoin exchanges make withdrawal a burdensome affair.
The new SMS bitcoin service allows one to pay in bitcoin via any CoinPip Merchant Point of Sales from the cellphone or mobile device that has SMS function. Anson Zeall, co-founder of both CoinPip and 8pip, and chairman of the Association of Crypto-Currency Enterprises and Start-ups, Singapore (ACCESS), believes that CardToCoin will make bitcoins more accessible to the general public, and also demystify it for those who can’t wrap their head around it.
“At the moment, bitcoin or crypto-currency exchanges are the most common ways to get bitcoins. The problem is, unless you’re a seasoned stock trader, the process of getting bitcoin is still very complicated and intimidating,” he says. “With CardToCoin, you can simply buy a card with S$20 worth of bitcoin and then redeem it online with your tablet, phone or PC.”
Two new developments provide a glimpse into an interesting future for bitcoins. The first pertains to trading bullion for bitcoin as done by a Singapore-based bullion dealer, BullionStar.
What motivated the co-founder of the company, CEO Torgny Persson, to set up shop in Singapore was the government’s removal of Goods and Services Tax (GST) on precious metals in 2012, its encouragement of bullion investment and the reduction of red tape associated with bullion investment.
Moreover, Singapore has no capital gains tax on bullion investments, no associated reporting requirements, and it permits cash transactions in bullion. All these factors, and the many options for secure storage and strong property protection rights, have made the city-state an appealing destination for conservative investments such as metals. It is also one of the few countries with official policies relating to digital currency and taxation.
Inspired by US-based Amagi Metals, one of the first bullion dealers in the world to accept bitcoin, BullionStar now wants investors to view their portfolio holdings in both bitcoin and precious metals as actual currencies, viewing charts and comparing the prices between them as units of account and stores of value.
Buyers in Singapore can buy online or at BullionStar’s shopfront right in Singapore’s Central Business District, and take physical possession of their bullion as soon as a bitcoin transaction receives the required six confirmations.
They also have the option of storing their bullion in BullionStar’s integrated vault, which acts as a kind of ‘bullion bank’, letting owners view their metals whenever they choose. The company is insured to store up to S$20 mil in metals on its premises.
Analysts say selling bullion for bitcoin can be quite lucrative, even outside Singapore. In fact, it may be one of the more profitable digital currency business around today.
The other interesting development was when forex broker FXOpen quickly became one of the leading online financial firms to embrace digital currency trading. It entered into partnership with bitcoin exchange BTC-e last year, providing the bitcoin exchange with trading technology and the ability to offer the MetaTrader 4 platform.
Since then, it has created a B2B unit that offers liquidity for digital currencies as well as launched retail trading in bitcoins and other digital currencies. In addition, following BTC-e’s lead, FXOpen listed Chinese yuan denominated bitcoin and litecoin trading on its roster of tradable digital currencies.