Is Bitcoin gaining popularity in Singapore after U.S. approval? What does a recent study reveal about Singaporeans’ interest in Bitcoin ETFs?
The people of Singapore are increasingly embracing Bitcoin (BTC), with recent developments in the U.S. playing a significant role. According to a recent study by Independent Reserve, a crypto exchange based in Singapore, 39% of the population has shown interest in Bitcoin following the approval of spot Bitcoin exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC).
Lasanka Perera, the CEO of Independent Reserve Singapore, credits the surge in Bitcoin demand to institutional investments triggered by the approval of spot Bitcoin ETFs. He stated:
“At the same time, awareness is high, with 51% of Singaporeans being aware of the SEC’s approval of spot Bitcoin ETFs. Additionally, 33% are considering investing through overseas offerings due to the absence of such products for retail investors in Singapore.”
As the Bitcoin halving event approaches in April, 48% of crypto investors in Singapore are planning to increase their Bitcoin holdings over the next year. It is particularly noteworthy that 68% of investors who hold over 50% of their portfolios in crypto intend to increase their Bitcoin positions.
The study also highlights the sophistication of Singaporean investors, with 52% having more than three years of market experience and maintaining increasingly diverse portfolios. Furthermore, 52% prioritize portfolio diversification, indicating a growing confidence in cryptocurrency as an alternative asset class.
However, 75% of Singaporeans prefer direct investment in Bitcoin through crypto exchanges rather than through ETFs, citing lower fees and a wider range of trading options.
Regulatory landscape and crypto adoption in Singapore
In January 2024, the Monetary Authority of Singapore (MAS) issued a caution against retail investors in the country considering spot Bitcoin ETFs in international markets. MAS emphasized that despite the recent approval of such funds in the U.S., spot Bitcoin ETFs have not been approved as eligible assets for collective investment schemes (CIS).
MAS also introduced new rules in November 2023 to protect retail crypto investors, prohibiting businesses from offering incentives like free tokens upon signup. The regulator aims to prevent such incentives from influencing customers’ judgment when using crypto services. Additionally, businesses are not allowed to offer margin/leverage transactions and cannot accept locally issued credit cards to reduce easy access to debt financing.
Despite regulatory efforts, Singapore is witnessing a rise in crypto use cases. The prominent super app Grab now allows users in Singapore to make payments using cryptocurrencies like Bitcoin, Ethereum, and others. This development, facilitated by Grab’s crypto payments partner Triple-A, indicates a growing acceptance of crypto as a legitimate means of payment for everyday services.
Moreover, cryptocurrency exchanges in Singapore are receiving regulatory approval, signaling the city-state’s emergence as a crypto hub in Asia. OKX’s Singapore subsidiary has received in-principle approval for a payments license, allowing it to offer digital payment token and cross-border money transfer services. Upbit, another major exchange, has obtained a full license, reaffirming its commitment to serving both retail and institutional clients in Singapore’s thriving digital ecosystem.
Singapore’s push into tokenization, staking, and DeFi
In a move towards embracing crypto, MAS unveiled its stance on integrating decentralized finance (DeFi) and asset tokenization into established financial structures in June 2023. The release of the document titled ‘Project Guardian: Enabling Open & Interoperable Networks’ explores the vast potential of DeFi and examines ways to digitize tangible assets.
Trials conducted by financial giants like HSBC, Marketnode, UOB, and UBS Asset Management demonstrated enhanced customization, broader distribution, and reduced trading time and costs. In a separate development, a study by Seedly and Coinbase in February 2024 reveals a growing engagement of Singaporeans with staking services. Approximately 55% of respondents reported using staking services through centralized exchanges, while 38% utilized DeFi applications. This trend reflects optimism about the long-term potential of crypto, with 56% believing it to be the future of finance.
Could Singapore become the next hub for BTC ETFs?
Singapore’s crypto investment practices reflect its ambition to become a leading fintech hub in Asia. Clear regulations, notably through the Payment Services Act of 2019, create a secure environment for crypto projects, ensuring investor protection and market integrity. Government initiatives, such as blockchain pilot projects and exemption periods for digital payment token services, further support the ecosystem, helping businesses adapt to regulatory changes seamlessly.
Despite some setbacks, like the collapse of local crypto projects such as Terraform Labs and Three Arrows Capital, Singapore remains an attractive destination for crypto ventures. Strong digital infrastructure, ease of doing business, and no capital gains tax make it appealing to crypto investors and startups. Access to venture capital and government support also attract investment, creating fertile ground for startups.
In late 2023, Singapore emerged as a significant destination for blockchain and crypto venture capital funding, attracting over 11% of global investments. Analysts attribute this surge to various factors, including the collapse of the FTX crypto exchange and subsequent revaluation by U.S.-based crypto companies. Singapore’s reputation as a hub for Web3 developer talent, driven by initiatives like the Smart Nation Initiative, strengthens its status as a tech innovator hub.
Hence, the potential for spot BTC ETFs in Singapore looks promising. While Singaporean investors currently prefer direct crypto investments, the introduction of crypto ETFs could broaden access to digital assets, appealing to a wider investor base. As regulations evolve, with a focus on balancing innovation and investor protection, Singapore could become a premier destination for crypto ETFs, enhancing its position as a financial and crypto hub in Asia.