Bangkok The crypto world slides from one crisis to the next. And a city-state in Southeast Asia often plays a crucial role. The financial metropolis of Singapore was the headquarters of Terraform Labs. Their crypto coin Terra USD collapsed in May despite being pegged to real-world currencies — a so-called stablecoin.
The formerly billionaire and now bankrupt crypto hedge fund Three Arrows Capital also operated from the tropical city, as did a number of trading platforms that have stumbled in recent months.
When the bankrupt exchange FTX, which owes creditors more than three billion dollars, crashes, Singapore is again involved, this time as an investor. State-owned investment company Temasek – which aims to boost the wealthy tax haven’s reserves – is now posting its $275 million investment in the crypto exchange as a total loss. “Our confidence in the actions, judgment and leadership of FTX founder Sam Bankman-Fried appeared to have been misplaced,” the state investor said.
Singapore’s networking in the crypto scene is no coincidence. In the past, the country on the equator has become one of the richest in the world thanks to its openness to the financial industry. The government dreamed of replicating success in the crypto space, saying it was “excited about the potential of building a crypto or token economy.”
Top jobs of the day
Find the best jobs now and
be notified by email.
Cryptocurrencies: no thanks, blockchain technology: yes please
The collapse of large parts of the crypto economy, which Singapore has attracted in recent years, leaves the authorities in need of explanation. It is not only about the loss of government investment and the money of small investors, but also about Singapore’s reputation as one of the leading financial centers in Asia.
To limit the damage, those responsible have changed their tone. Speculations with cryptocurrencies are rejected, while innovations using blockchain technology are still welcomed, is the language of the central bank, which is responsible for regulation.
The change can already be seen: Instead of letting opaque crypto exchanges go almost unmolested to catch customers, Singapore introduced an advertising ban this year. Further restrictions are currently being discussed.
The financial metropolis could not repeat its past successes in the crypto market.
(Photo: Reuters)
In the future, private customers in Singapore may be prohibited from buying cryptocurrencies with borrowed money. The warnings are clear: cryptocurrencies are considered unsuitable for use as a means of payment and “extremely dangerous for retail investors,” the financial regulator said. At the same time, however, they want to stick to the vision of an ecosystem of innovative crypto technologies.
At first glance, this kind of balancing act between the crypto market and blockchain may seem reasonable. However, almost a decade and a half later, almost no mass-market applications have been found for the technology behind Bitcoin that go beyond the creation of huge speculative bubbles.
>> Read also: Crypto, Bitcoin, Blockchain – is that it?
Even high-ranking representatives of the crypto industry are wondering whether there will be anything left of their business if they stop gambling with the coins. Vitalik Buterin, co-founder of the blockchain network Ethereum, called Singapore’s distinction between the use of blockchains and cryptocurrencies strange.
“The reality is that without cryptocurrency, nobody will be interested in blockchains.” Brian Armstrong, head of trading platform Coinbase, was also skeptical. “If Singapore wants to be a Web 3 hub and at the same time restricts private trade, it doesn’t really go together,” he said, looking at possible further restrictions.
In any case, Singapore’s new approach to the crypto industry should offer a valuable lesson for the rest of the world: The island state could soon show how much of the supposed future industry is still left when betting on rising prices and the longing for fast Suddenly, wealth is no longer the focus. A development that the industry can only counter with the principle of hope.
More: Luxury real estate, confusing bank accounts, cryptocurrencies: what remains of the FTX empire