Coinbase’s MPI License: A Game-Changer For Crypto In Singapore, But A Challenge For Competitors

Coinbase’s MPI License: A Game-Changer For Crypto In Singapore, But A Challenge For Competitors

Coinbase, the largest cryptocurrency exchange in the US, has recently obtained a Major Payment Institution (MPI) licence from the Monetary Authority of Singapore (MAS), the country’s central bank and financial regulator. This licence will allow Coinbase to offer regulated digital payment token (DPT) products and services in Singapore, such as buying and selling cryptocurrencies, storing them in wallets, and transferring them to other users.

They not the first crypto exchange to receive an MPI licence from MAS. In June 2023, two other platforms, Crypto.com and Circle, were also granted full licences after obtaining in-principle approvals in 2021. However, Coinbase is arguably the most prominent and influential one among them, given its global reach, market capitalization, and reputation.

Coinbase’s entry into the Singaporean market is seen by many as a positive sign for the crypto industry in the region, as it reflects the country’s openness and support for innovation and digital finance. Singapore has been widely regarded as a crypto-friendly jurisdiction, with a clear and progressive regulatory framework for DPT service providers under the Payment Services Act (PSA) that came into effect in 2020.

According to the PSA, any entity that provides DPT services in Singapore must obtain a licence from MAS, either as a standard payment institution (SPI) or as an MPI. The difference between the two types of licences lies in the scale and scope of their operations. SPIs can provide any combination of regulated payment services, but are subject to transactional volume or e-money limits. MPIs have no such limits, but are subject to more stringent requirements, such as safeguarding customer funds, complying with anti-money laundering and counter-terrorism financing rules, and submitting regular audits and reports to MAS.

By obtaining an MPI licence, Coinbase has demonstrated its ability and willingness to meet the high standards set by MAS for DPT service providers. This could give it a competitive edge over other crypto exchanges that operate in Singapore, especially those that have not yet obtained a licence or are still waiting for approval.

As mentioned on MAS’s website, there are currently 170 entities that have applied for a licence under the PSA, but only three have been granted full licences so far (Coinbase, Crypto.com, and Circle). Among the applicants are some of the most popular and well-known crypto exchanges in Singapore, such as Binance, Kraken, Coinhako, Gemini, and Independent Reserve. These exchanges have been allowed to continue their operations while their applications are being processed by MAS, under a grace period that was initially supposed to end on July 28, 2021. However, due to the large number of applications and the complexity of the assessment process, MAS has extended the grace period for most applicants until January 28, 2023.

This means that these exchanges have less than four months left to obtain their licences from MAS, or they will have to cease their DPT services in Singapore. This could pose a significant challenge and risk for them, as they may lose their market share and customer base to Coinbase and other licensed platforms.

Competitive Challenges For Other Crypto Exchanges

While Coinbase’s MPI license is undoubtedly a boon for the company, it also presents a competitive challenge for other crypto exchanges operating in Singapore. Here are some key challenges they are likely to face:

  • Regulatory Compliance Pressure: The foremost challenge for competitors is the need to meet the stringent regulatory standards set by MAS. Coinbase’s compliance with these standards sets a high bar, and other exchanges will need to invest significant resources to achieve similar levels of regulatory approval.
  • Increased Competition: Coinbase’s entry into the Singaporean market intensifies competition. As a well-established global exchange, Coinbase has a strong brand presence and the resources to invest in marketing, user acquisition, and product development. Competitors will need to step up their game to compete effectively.
  • User Trust and Confidence: Coinbase’s MPI license not only signifies regulatory compliance but also implies a higher degree of trust and confidence from users. Competitors will need to work harder to gain the trust of customers and differentiate themselves in a market where regulatory compliance and security are paramount.

Recommendations For Success In The Singaporean Crypto Market

To thrive in this evolving landscape and address the challenges posed by Coinbase’s MPI license, crypto exchanges in Singapore should consider several strategic approaches:

  • Collaborate with Local Partners: Building relationships with local financial institutions, fintech companies, and government agencies can help crypto exchanges navigate the complex regulatory landscape in Singapore. Collaborations can also open doors to new markets and customer segments.
  • Innovate New Products and Services: To stand out in a competitive market, exchanges should focus on innovation. Developing new products and services that cater to the unique needs and preferences of Singaporean users can help differentiate them from Coinbase and other competitors.
  • Educate Customers and Regulators: Crypto exchanges should actively engage in educational initiatives aimed at both customers and regulators. Providing resources and information on responsible crypto use, security practices, and the benefits of blockchain technology can help build trust and bridge knowledge gaps.
  • Adapt to Changing Market Conditions: The crypto industry is known for its rapid evolution. Exchanges must remain agile and adaptable to changing market conditions, regulatory updates, and technological advancements. Staying ahead of the curve can be a key differentiator.
  • Foster Regulatory Relationships: Building positive relationships with regulators is essential. Exchanges should actively engage with regulatory authorities, participate in industry consultations, and contribute to the development of fair and effective crypto regulations.
  • Emphasize Security and Compliance: Like Coinbase, prioritizing security measures and regulatory compliance is non-negotiable. Exchanges should invest in robust security infrastructure and continuously monitor for potential vulnerabilities or risks.
  • Customer-Centric Approach: To succeed in a competitive market, exchanges should prioritize the needs and concerns of their customers. Providing excellent customer service, transparent fee structures, and responsive support channels can help build loyalty and trust.
  • Diversify Product Offerings: Beyond trading, exchanges should consider diversifying their product offerings. This could include services like staking, lending, or even non-fungible tokens (NFTs). Diversification can attract a broader user base and increase revenue streams.

In Conclusion

Coinbase’s MPI license from MAS is a watershed moment for the cryptocurrency industry in Singapore. It signifies not only the legitimization of digital assets but also the importance of regulatory compliance and security within the sector. While this development poses competitive challenges for other crypto exchanges operating in the country, it also sets a high standard that can benefit the entire industry.

Success in the Singaporean crypto market will require a combination of regulatory adherence, innovation, customer education, and adaptability. By focusing on these aspects and strategically positioning themselves, other exchanges can thrive alongside Coinbase in this dynamic and rapidly evolving sector. Ultimately, the success of these exchanges will contribute to the broader adoption and acceptance of cryptocurrencies in Singapore and around the world.

 

Source: https://www.nasdaq.com/articles/coinbases-mpi-license:-a-game-changer-for-crypto-in-singapore-but-a-challenge-for

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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Coinbase’s MPI License: A Game-Changer For Crypto In Singapore, But A Challenge For Competitors

Coinbase’s MPI License: A Game-Changer For Crypto In Singapore, But A Challenge For Competitors

Coinbase, the largest cryptocurrency exchange in the US, has recently obtained a Major Payment Institution (MPI) licence from the Monetary Authority of Singapore (MAS), the country’s central bank and financial regulator. This licence will allow Coinbase to offer regulated digital payment token (DPT) products and services in Singapore, such as buying and selling cryptocurrencies, storing them in wallets, and transferring them to other users.

They not the first crypto exchange to receive an MPI licence from MAS. In June 2023, two other platforms, Crypto.com and Circle, were also granted full licences after obtaining in-principle approvals in 2021. However, Coinbase is arguably the most prominent and influential one among them, given its global reach, market capitalization, and reputation.

Coinbase’s entry into the Singaporean market is seen by many as a positive sign for the crypto industry in the region, as it reflects the country’s openness and support for innovation and digital finance. Singapore has been widely regarded as a crypto-friendly jurisdiction, with a clear and progressive regulatory framework for DPT service providers under the Payment Services Act (PSA) that came into effect in 2020.

According to the PSA, any entity that provides DPT services in Singapore must obtain a licence from MAS, either as a standard payment institution (SPI) or as an MPI. The difference between the two types of licences lies in the scale and scope of their operations. SPIs can provide any combination of regulated payment services, but are subject to transactional volume or e-money limits. MPIs have no such limits, but are subject to more stringent requirements, such as safeguarding customer funds, complying with anti-money laundering and counter-terrorism financing rules, and submitting regular audits and reports to MAS.

By obtaining an MPI licence, Coinbase has demonstrated its ability and willingness to meet the high standards set by MAS for DPT service providers. This could give it a competitive edge over other crypto exchanges that operate in Singapore, especially those that have not yet obtained a licence or are still waiting for approval.

As mentioned on MAS’s website, there are currently 170 entities that have applied for a licence under the PSA, but only three have been granted full licences so far (Coinbase, Crypto.com, and Circle). Among the applicants are some of the most popular and well-known crypto exchanges in Singapore, such as Binance, Kraken, Coinhako, Gemini, and Independent Reserve. These exchanges have been allowed to continue their operations while their applications are being processed by MAS, under a grace period that was initially supposed to end on July 28, 2021. However, due to the large number of applications and the complexity of the assessment process, MAS has extended the grace period for most applicants until January 28, 2023.

This means that these exchanges have less than four months left to obtain their licences from MAS, or they will have to cease their DPT services in Singapore. This could pose a significant challenge and risk for them, as they may lose their market share and customer base to Coinbase and other licensed platforms.

Competitive Challenges For Other Crypto Exchanges

While Coinbase’s MPI license is undoubtedly a boon for the company, it also presents a competitive challenge for other crypto exchanges operating in Singapore. Here are some key challenges they are likely to face:

  • Regulatory Compliance Pressure: The foremost challenge for competitors is the need to meet the stringent regulatory standards set by MAS. Coinbase’s compliance with these standards sets a high bar, and other exchanges will need to invest significant resources to achieve similar levels of regulatory approval.
  • Increased Competition: Coinbase’s entry into the Singaporean market intensifies competition. As a well-established global exchange, Coinbase has a strong brand presence and the resources to invest in marketing, user acquisition, and product development. Competitors will need to step up their game to compete effectively.
  • User Trust and Confidence: Coinbase’s MPI license not only signifies regulatory compliance but also implies a higher degree of trust and confidence from users. Competitors will need to work harder to gain the trust of customers and differentiate themselves in a market where regulatory compliance and security are paramount.

Recommendations For Success In The Singaporean Crypto Market

To thrive in this evolving landscape and address the challenges posed by Coinbase’s MPI license, crypto exchanges in Singapore should consider several strategic approaches:

  • Collaborate with Local Partners: Building relationships with local financial institutions, fintech companies, and government agencies can help crypto exchanges navigate the complex regulatory landscape in Singapore. Collaborations can also open doors to new markets and customer segments.
  • Innovate New Products and Services: To stand out in a competitive market, exchanges should focus on innovation. Developing new products and services that cater to the unique needs and preferences of Singaporean users can help differentiate them from Coinbase and other competitors.
  • Educate Customers and Regulators: Crypto exchanges should actively engage in educational initiatives aimed at both customers and regulators. Providing resources and information on responsible crypto use, security practices, and the benefits of blockchain technology can help build trust and bridge knowledge gaps.
  • Adapt to Changing Market Conditions: The crypto industry is known for its rapid evolution. Exchanges must remain agile and adaptable to changing market conditions, regulatory updates, and technological advancements. Staying ahead of the curve can be a key differentiator.
  • Foster Regulatory Relationships: Building positive relationships with regulators is essential. Exchanges should actively engage with regulatory authorities, participate in industry consultations, and contribute to the development of fair and effective crypto regulations.
  • Emphasize Security and Compliance: Like Coinbase, prioritizing security measures and regulatory compliance is non-negotiable. Exchanges should invest in robust security infrastructure and continuously monitor for potential vulnerabilities or risks.
  • Customer-Centric Approach: To succeed in a competitive market, exchanges should prioritize the needs and concerns of their customers. Providing excellent customer service, transparent fee structures, and responsive support channels can help build loyalty and trust.
  • Diversify Product Offerings: Beyond trading, exchanges should consider diversifying their product offerings. This could include services like staking, lending, or even non-fungible tokens (NFTs). Diversification can attract a broader user base and increase revenue streams.

In Conclusion

Coinbase’s MPI license from MAS is a watershed moment for the cryptocurrency industry in Singapore. It signifies not only the legitimization of digital assets but also the importance of regulatory compliance and security within the sector. While this development poses competitive challenges for other crypto exchanges operating in the country, it also sets a high standard that can benefit the entire industry.

Success in the Singaporean crypto market will require a combination of regulatory adherence, innovation, customer education, and adaptability. By focusing on these aspects and strategically positioning themselves, other exchanges can thrive alongside Coinbase in this dynamic and rapidly evolving sector. Ultimately, the success of these exchanges will contribute to the broader adoption and acceptance of cryptocurrencies in Singapore and around the world.

 

 

 

Source: https://www.benzinga.com/23/10/35201460/coinbases-mpi-license-a-game-changer-for-crypto-in-singapore-but-a-challenge-for-competitors

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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Stablecoins in Singapore: Navigating Between Promise and Pitfalls

Stablecoins in Singapore: Navigating Between Promise and Pitfalls

In recent years, Singapore has emerged as a global leader in embracing cryptocurrency and blockchain technology. With a forward-thinking approach, the city-state has been at the forefront of fostering innovation while maintaining a keen eye on regulatory safeguards. As the discussion around stablecoins gains momentum, the question arises: Is Singapore truly ready to harness the potential of stablecoins, and what implications could this digital evolution bring?

What is Stablecoin?

A stablecoin is a type of cryptocurrency specifically designed to maintain a steady value relative to another asset, which could be a fiat currency or a commodity. This unique characteristic sets stablecoins apart from more volatile cryptocurrencies like Bitcoin and Ethereum.

Stablecoins can be categorized into two main types:

Fiat-backed stablecoins: These stablecoins are backed by traditional fiat currencies, such as the US dollar or the euro. To ensure their stability, the issuer holds reserves of the corresponding fiat currency in a bank account. Each stablecoin is intended to be redeemable for a specific amount of the backing fiat currency.

Crypto-backed stablecoins: In this type, stablecoins are backed by other cryptocurrencies like Bitcoin or Ethereum. The issuer maintains reserves of these cryptocurrencies in a wallet, with each stablecoin representing a defined amount of the backing crypto.

There are algorithmic stablecoins as well, which lack direct backing by physical assets. Instead, algorithms are employed to regulate their value, often involving the burning or minting of tokens to maintain stability.

Stablecoins serve various purposes, including:

  • Payments: Stablecoins can be utilized for everyday transactions, such as purchasing goods and services or transferring funds between individuals.
  • Investing: Some use stablecoins as a means to invest in other cryptocurrencies or as a tool to hedge against the price volatility of more unpredictable cryptocurrencies.
  • Decentralized Finance (DeFi): Stablecoins play a crucial role within decentralized finance applications, enabling activities like lending and borrowing in the DeFi ecosystem.
  • Speculation: Certain individuals engage in speculative trading of stablecoins, aiming to capitalize on potential price fluctuations and generate profits.

Stablecoins have gained prominence due to their potential to combine the advantages of blockchain technology with the stability of traditional assets. Their versatile applications across various sectors underscore their significance in shaping the future of digital finance.

Singapore’s Crypto-Friendly Stance

Singapore has long been acknowledged as a welcoming environment for the crypto sector, a stance that’s been in place since the beginning. The Monetary Authority of Singapore (MAS) has actively fostered the growth of fintech ventures, attracting investments and entrepreneurial endeavors aimed at contributing to the country’s advancement. The MAS has undertaken a thoughtful and deliberate path toward regulating cryptocurrencies, striving to strike a balance between promoting innovation and ensuring the safeguarding of consumers and investors from potential hazards.

Singapore has successfully introduced several crypto-friendly frameworks, some of which encompass:

Payment Services Act: Commencing in January 2020, Singapore saw the implementation of the Payment Services Act. This step was a response to the Financial Action Task Force’s updated 2018 guidelines concerning Anti-Money Laundering (AML) and the Combatting of Financing of Terrorism (CFT) risks that cross borders in relation to cryptocurrencies. The Payment Services Act establishes an adaptable structure for overseeing payment systems and providers of payment services in Singapore. It sets forth requirements for registration, in addition to guidelines for AML and CFT targeted at cryptocurrency businesses.

Cryptocurrency Consumer Protection Law: In the middle of January 2022, Singapore’s MAS enacted a set of laws focused on safeguarding investors from the relentless exposure to digital asset content through mediums like billboard ads and crypto ATMs. This initiative led to the prohibition of all cryptocurrency-linked advertisements and the operation of crypto ATMs in public spaces. The MAS, in its communication, emphasized its encouragement of blockchain technology development and innovative applications of cryptocurrencies. However, it cautioned against the high risk associated with cryptocurrency trading, discouraging any presentation that downplays these substantial risks.

Pioneering Role and Recognition: Singapore has emerged as a trailblazer in the cryptocurrency arena, attributed to its favorable regulatory and tax frameworks, as well as its broad incorporation of blockchain technology across various sectors of its economy. By the close of 2021, the reputable global crypto rating firm Coincub conferred Singapore with the top ranking of the world’s most crypto-friendly country. This accolade was attributed to factors such as a robust economy, a supportive legislative environment, and an elevated level of cryptocurrency adoption.

In August 2023, the MAS introduced a comprehensive regulatory framework tailored to stablecoins. This move followed an extensive consultation with the public in October 2022 on this specific topic. The framework is designed to ensure stablecoins regulated within Singapore maintain a substantial degree of value stability. It permits single-currency stablecoins pegged to the Singapore Dollar or other G10 currencies, issued within Singapore. These stablecoins are required to facilitate full cash withdrawals within five days upon customer request. Furthermore, issuers must possess a minimum base capital of one million Singapore dollars or half of their annual operating expenses. They are also mandated to maintain a corresponding level of capital and liquid assets to safeguard against insolvency and effectively manage any related consequences. Stablecoin providers that fulfill these rigorous criteria receive the coveted “MAS-regulated stablecoins” endorsement. This signifies to the global community that these instruments offer a level of security on par with other financial instruments.

This newly established regulatory framework underscores the MAS’s unwavering commitment to promoting transparency and diligent oversight over the burgeoning crypto sector, all while invigorating innovation within the city-state. By instituting robust regulations, firms that adhere to the stipulated criteria and address the multitude of associated risks can thrive and operate. This approach not only fosters innovation but also serves as a shield, protecting consumers and investors against potential threats. Singapore is positioning itself favorably for the anticipated developments of 2030, when an economy centered around tokenization is expected to take shape.

Benefits on the Horizon

The adoption of stablecoins and Central Bank Digital Currencies (CBDCs) holds transformative potential for Singapore’s financial landscape. Efficiency gains are a driving force, promising quicker and more cost-effective payment solutions. Moreover, these digital currencies could attract increased investment, bolstering the country’s economic prospects.

Financial inclusion could experience a boost as well. Stablecoins offer a digital alternative to traditional banking, providing easier access to financial services. This accessibility is crucial in a digital age where the barriers of physical proximity are being dismantled.

Mitigating the Risks

While the promise of stablecoins is enticing, it’s essential to navigate the potential pitfalls diligently. One concern lies in the volatility of stablecoin prices. Despite being pegged to real-world assets, market dynamics could still lead to fluctuations, potentially exposing investors to financial risks.

Cybersecurity remains another significant challenge. As digital assets, stablecoins are stored on vulnerable digital ledgers, susceptible to cyberattacks. Ensuring robust security measures is imperative to safeguard users’ funds.

The regulatory landscape is yet another dimension of consideration. As governments worldwide grapple with the evolving nature of cryptocurrencies, regulations could change, impacting the use and trade of stablecoins.

Balancing Act: Embracing the Promise, Managing the Risks

Singapore’s readiness for stablecoins rests on a foundation of thoughtful regulation and an environment conducive to innovation. As the government collaborates with the private sector to develop CBDCs and pioneers stablecoin frameworks, the nation is poised to capitalize on the benefits of these digital assets.

The road ahead entails a delicate balance, where the potential for financial inclusion, streamlined payments, and enhanced security must be weighed against market volatility, cybersecurity risks, and evolving regulations. Singapore’s journey into the realm of stablecoins is an ongoing narrative that showcases the city-state’s commitment to harnessing the power of innovation while safeguarding its citizens and investors.

In this dynamic landscape, the question of whether Singapore is ready for stablecoins takes on greater significance. The answer may very well shape the trajectory of digital finance not only within Singapore but on a global scale.

 

 

Source: https://www.techopedia.com/stablecoins-in-singapore-a-promising-path-or-potential-pitfalls

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

j j j