[Market Info] Singapore’s Cryptocurrency Regulations
Singapore in general is a jurisdiction that’s pro cryptocurrency. In a nutshell, it’s legal in Singapore. Anyone can carry out cryptocurrency-related activities, as long as it’s within the normal boundary of financial regulations. We summarize the relevant laws and regulations in this article for reference.
Is Cryptocurrency Legal in Singapore?
Yes. Cryptocurrencies are virtual assets in Singapore’s definition but are not legal tender, which means it’s not money and is therefore not regulated as a currency.
In 2019, Singapore’s International Commercial Court created precedence in the case B2C2 Ltd v Quoine Pte Ltd [2019] SGHC(l) 3 where judge Simon Thorley IJ ruled that “Cryptocurrencies are not legal tender in the sense of being a regulated currency issued by a government but do have the fundamental characteristic of intangible property as being an identifiable thing of value.”
Singapore has no foreign exchange control or restriction. Whilst the Singapore dollar is the currency used, most banks in Singapore offer USD account as well.
Is It Legal to Mine Cryptocurrency in Singapore?
Yes. There’s no regulation on this in Singapore. However, electricity is expansive here and it’s pretty hot in Singapore, probably making it the worst place to mine Bitcoin. But, yes it’s legal.
You have to pay a 17% tax on this income. Most likely no-one cares if you just have a computer at home, but the principle is that it’s taxable as a source of income.
What’s Tax on Cryptocurrency in Singapore?
Mining is taxable as mentioned earlier.
To start with, Singapore has no capital gain tax. Businesses and individuals who buy and profit from the rise in the value of their cryptocurrency holdings in Singapore do not pay tax on their sales.
There’s a 17% income tax in Singapore, so if your business or profession is trading bitcoin to gain a profit, it’s taxable at 17%. In practice, it’s a gray area as to what constitutes trading and what’s an investment (for capital gain), when cryptocurrency is concerned.
In addition, bitcoin (or ether that are digital tokens in nature) can be used for payments in Singapore. Whilst there’s a consumption tax (Goods and Services Tax) of 7%, using digital tokens as a form of payment for goods and services is exempted. So generally, buying and selling cryptocurrency does not attract GST. Nonetheless, stablecoins might be taxed, if the purpose is to circumvent a normal GST-taxable transaction.
The below are the two IRAS directives relating to cryptocurrency:
IRAS e-Tax Guide: GST (on) Digital Payment Tokens
IRAS e-Tax Guide: Income Tax Treatment of Digital Tokens
How to buy Cryptocurrency in Singapore?
This is an interesting question. First of all, the regulation in Singapore generally treats the buy and sell of cryptocurrency as digital payment — so that it goes under Payment Services Act, and any company providing trading or exchange of cryptocurrency services need to be licensed. Many exchanges, such as Binance, has such (provisional) licenses, but are only allowed to carry out limited services of cryptocurrency trading in Singapore. For example, Binance.Sg only provides spot trading services, and not investment products or futures. Most other exchanges in Singapore have a similar situation, and there’s a pretty low cap as to how much you can buy every year.
However, it’s being discussed and planned — there’s probably going to be a national cryptocurrency exchange in Singapore soon. DBS, the largest bank in Singapore, has announced a plan for it last December and some educational articles are available on the bank’s website.
Taking one step back, as Singapore does not have foreign exchange control, it’s always possible to remit (via SWIFT) USD from a Singapore bank to another bank in USA or Europe. And then, spending the money in another country is not regulated. For instance, minting USDT is not regulated by Singapore.
Can I Raise Funds in Singapore with Cryptocurrency, aka, ICO?
The answer is no. In Singapore, it’s not allowed to raise funds from the public unless it’s registered as an IPO (or similarly a public debt offering). So, ICO is not allowed.
However, you can always start a company with cryptocurrency related activities, and get angel or VC investments. Singapore does not differentiate cryptocurrency related activities to any other financial activities — the regulations apply.
Can I Raise Fund in Singapore to Invest in Cryptocurrency?
Singapore, being a financial centre, attracts a lot of fund managers and family offices. So yes — it’s theoretically possible to set up a fund and invest in crypto. In practice, the regulatory authority in Singapore, Monetary Authority of Singapore (“MAS”), has not yet licensed any fund purely for cryptocurrency investment.
MAS has only licensed a company that provides custodian services in Singapore for cryptocurrencies.
However, it’s permitted that a fund to be set-up to invest in cryptocurrency-related products in traditional markets. For instance, you can invest in Grayscales’ exchange traded products. Three Arrows Capital is based in Singapore.
Other Regulations and Concerns
Singapore has pretty stringent money-related regulations, so investment in cryptocurrency might subject to AML (Anti-Money Laundering), and CFT (combatting the Financing of Terrorism) checks by your banks, and accountants. Verifying the sources of capital for cryptocurrency and keeping tracks of the fund movements are important. Ideally, set-up a company to hold cryptocurrency investments might be a good idea for book-keeping and compliance purpose.
(Serenity Team, 27 May 2021, Twitter: https://twitter.com/SerenityFund)
