Celebratory Token2049 and Serene Singapore

Token2049 and Singapore

Singapore seems to be “uninterested” in TOKEN 2049.

Author: Jade

Editor: halou.eth

With over 300 exhibitors and over 200 off-site events, TOKEN2049 is the largest Web3 event this year.

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People gather at the iconic Marina Bay Sands Hotel in Singapore, bustling with social interactions. But outside the walls, on the streets of Singapore, people go about their daily lives as usual. The concentration of Web3 in the streets of Asia is close to zero.

After landing in Singapore, Foresight News randomly interviewed 7 locals, two of whom said they have purchased cryptocurrency, while most others said they do not understand it, with three considering it a scam.

In fact, starting from January 2022, Singapore has banned cryptocurrency projects from promoting their products to local residents. Web3 promotion on websites, broadcasts, billboards, and other platforms has been completely blocked. In contrast, in April this year, during the Web3 Carnival in Hong Kong, advertisements for Web3 were posted on the streets and buses.

Another noticeable contrast is that compared to Hong Kong’s Chief Executive Carrie Lam and Financial Secretary Paul Chan, who have shown enthusiasm for embracing Web3, there were hardly any Singapore officials present at the TOKEN2049 event and they rarely gave interviews.

During TOKEN2049, many Hong Kong legislators (Wu Chi-wai, Eddie Chu, Michael Tien), government officials, and university presidents (Albert Wong) came to show their support, while Singapore, as the “host,” did not have any political or academic leaders attending the event.

“They have never appeared. For the Monetary Authority of Singapore, TOKEN2049 represents speculation,” said Professor Lee Kok-Kwong from Singapore University of Social Sciences, adding that this is not surprising. “TOKEN2049 still doesn’t grasp the essence of Web3.”

“Singapore has held many conferences during the same period, such as the Global Biomedical Summit, Milken, Forbes Global CEO Conference, SuperReturn, and many other traditional finance events, all of which are attended by both political and business leaders… TOKEN2049 is just a small part of it,” said Lily Z. King, COO of Cobo.

For cryptocurrency practitioners, TOKEN2049 is significant, but for Singapore, it is insignificant.

In the midst of the bear market, Singapore remains restrained

Over the past year, Singapore has seemed somewhat distant from Web3.

It does not want to miss out on new technology, but it also deliberately maintains a certain distance. Compared to the close relationship between Hong Kong and Web3, Singapore and Web3 show a friendship that remains ambiguous and desires to keep a distance.

“Singapore likes to innovate and experiment with large institutions. After the FTX incident, Singapore is not inclined to let its own people and investors gamble on coin prices. However, they are very active in promoting blockchain technology and their ideas and intentions are very cutting-edge and open-minded in many ways.” Lily said.

“For example, this year I went to Switzerland with MAS (Monetary Authority of Singapore) and participated in the PointZero Summit together with the Swiss Financial Market Supervisory Authority and the Monetary Authority of Singapore. They had Circle and LianGuaixos on one side, and traditional banks on the other side, to debate on why we need stablecoins or Tokenized Deposits and other cutting-edge topics, while the officials from the Monetary Authority were acting as judges and making comments.”

“Regulators in Singapore are interested in practical application cases of the integration between Grab (equivalent to Uber abroad) and stablecoins.” Lily added.

However, Singapore’s openness to cryptocurrencies is extremely restrained, seemingly limited to technology and large institutions. In a broader sense, Singapore presents a reserved welcome.

Singapore’s attitude towards Web3, as the interviewee frequently cited in an interview with Foresight News, can be summarized with two statements.

The first is from Ravi Menon, Managing Director of the Monetary Authority of Singapore, in his speech in November last year, “Singapore wants to be a center for digital assets, but not a center for speculative cryptocurrencies.”

The other is from Deputy Prime Minister and Minister of Finance Heng Swee Keat, in his speech in November as well, “Singapore has no plans to become a hub for cryptocurrency activities, but rather to be an innovative and responsible participant in digital assets.”

Both of these statements were made after the well-known FTX incident. When TOKEN2049 was held last year, FTX founder Sam Bankman-Fried was still in the front row of guests, enjoying great popularity.

Just one month later, the $32 billion financial empire collapsed. According to statistics, at least 4.2% of Singaporean users had used FTX and were affected by the collapse. Temasek, Singapore’s sovereign wealth fund, is still being held accountable for its $275 million investment in FTX, and the compensation of the company’s executives and related teams has been reduced.

In this year, while Hong Kong is rising, the Lion City is no longer bustling.

According to data from FinTech Global Research, the transaction activity of Singapore’s fintech sector has declined for the first time in the past five years. In the first half of 2023, there were 84 transactions in Singapore’s fintech sector, a 27% decrease compared to the first half of 2022.

Some say that the FTX collapse has caused Singapore’s attitude towards Web3 to take a “sharp turn”. Is it really the case? What has Singapore been doing in the past year?

This year, in addition to the Hong Kong Monetary Authority repeatedly speaking out against speculative behavior, there haven’t been many overt actions from Singapore. On August 15th, the Monetary Authority of Singapore announced the final version of the regulatory framework for stablecoins, making Singapore one of the first jurisdictions in the world to include stablecoins in its local regulatory system.

On September 4th, the Monetary Authority of Singapore announced that it will introduce a series of regulatory measures by the end of the year, making Singapore one of the jurisdictions with the strictest regulatory system for retail use of cryptocurrencies.

While strengthening retail regulation, the Monetary Authority of Singapore is also providing funding support. In August, the Monetary Authority of Singapore announced that it will invest 150 million Singapore dollars in emerging technology projects such as Web3 over the next three years. The Monetary Authority of Singapore is calling for the use of Web3 innovative technology in industry use cases and will provide grant funding to support practical experiments and commercialization.

“This is not contradictory. Singapore has never relaxed its regulation of cryptocurrency retail,” said Adric, the market leader of dtcLianGuaiy, to Foresight News. Currently, there are 11 institutions in Singapore that have obtained Digital Payment Token (DPT) licenses, with dtcLianGuaiy, a Singaporean cryptocurrency payment provider, being one of them. “The government is more inclined to promote the use of virtual currency for payments rather than encouraging everyone to engage in transactions.”

In fact, Singapore’s attitude towards Web3 has never “suddenly changed,” but after the FTX incident, the focus of regulation shifted from anti-money laundering and counter-terrorism financing to investor protection on the retail side.

Founder Liu Jia Alice previously served as the Executive Director of China Minsheng Bank and decided to establish dtcLianGuaiy while pursuing an EMBA at the National University of Singapore in 2019. dtcLianGuaiy aims to develop encrypted payment channels in the Singapore market and provide regulated cryptocurrency payments for institutions and retail customers. dtcLianGuaiy told Foresight News that the number of users has grown by 200% since January, and transaction volume has also increased fourfold.

Anson, the compliance officer of dtcLianGuaiy, said that compliance does require funding. Monthly data on transaction volume and other information must be provided to MAS, and external audits must be conducted annually.

“We have been here for a long time and have been in communication with banks and other financial institutions. They all have licenses, and some have already issued stablecoins. They have even started issuing cards. However, these institutions are more traditional, and we don’t have much contact with them through TOKEN2049. These institutions and Web3 projects are not in the same circle, but they are more down-to-earth in their work,” said Xiong Wei, the founder of Evervision who moved to Singapore in May last year and built the Arweave Asia Ecology Conference here.

“The landing situation in Singapore is actually very good.” As early as May, StraitsX, a digital asset payment infrastructure, launched the Singapore dollar stablecoin XSGD on Hedra. In September, DCS Card Centre (DCS), a financial institution in Singapore with licenses for issuing credit cards and consumer cards, announced the launch of its payment token DCS Tokens (DUS). And a few days ago, Grab, known as the “Southeast Asian Didi,” launched a Web3 wallet based on the Polygon public chain, allowing users to store and manage digital assets.

Under this demand, projects that support fiat currency deposits and withdrawals have become relatively popular. Many projects providing payment solutions have also appeared at the main venue of TOKEN2049.

Foresight News onsite at TOKEN2049

In contrast, exchanges that rely on the retail end encountered difficulties in “settling down” in Singapore. Binance withdrew its license application in Singapore at the end of 2021, and then it was reported in March of this year that it planned to reapply, but with a shift in focus from retail customers to corporate customers.

“Cost is very important for Web3 projects. Centralized exchanges will definitely flow to countries with lower costs, but for purely outsourced projects, compliance or non-compliance doesn’t really matter; it’s the driving effect of operation. The direction of exchanges does not represent the development of Web3,” Xiong Wei told Foresight News. “In fact, the Monetary Authority of Singapore cannot control these things. It only regulates the areas where it conducts research, and it doesn’t have any involvement in areas where it doesn’t conduct research.”

Competing for the Web3 Capital? Singapore is in no hurry

KPMG mentioned in its Fintech Pulse Report for the first half of 2023 that as the United States tightens its scrutiny of the cryptocurrency industry, other jurisdictions (including Singapore and Japan) are becoming increasingly attractive to investors and startups. Singapore is particularly seen as a powerful pioneer because it has already established relevant regulations, including the Payment Services Act and the Digital Token Payment Act, and is planning to issue regulations related to stablecoin issuance.

The report also mentions that multiple jurisdictions in the Asia-Pacific region are committed to becoming global crypto asset hubs. Singapore has taken the lead in this field. In addition to Singapore, Japan and Hong Kong, China have also taken a series of measures to establish a strong crypto asset ecosystem.

Ran, co-founder of the NFT marketplace and aggregator Alienswap, told Foresight News that after leaving China last year, he stayed in Japan. After TOKEN2049, he decided to move to Singapore and consider establishing a company there next year.

“When we first went abroad, we considered Singapore, Hong Kong, and Japan. Although the cost of living in Japan is 30% lower than in Singapore, the relevant IT business is more open. However, there is a language barrier with Japanese. On the other hand, the project side in Japan has not undergone reform, so everyone still gathers in Singapore, where the communication cost is very low,” Ran is looking forward to coming to Singapore.

“I found that after last year’s conference, many investment institutions gradually moved to Singapore, which I didn’t expect. It’s also because it’s too bearish now. From 2021 to 2022, Singapore did support many startups. The overall policy of Singapore this year is indeed not as open as in 2022. But VCs still receive a lot of support in Singapore. There are policies that allow them to easily handle procedures and establish companies locally. From what I understand, the cost is actually very high if you want to obtain a license in Hong Kong now,” Ran sees that even in a bear market, Singapore still provides a lot of support.

Compared to the regulatory requirements in Hong Kong and Singapore, several senior practitioners have told Foresight News that Hong Kong is stricter. “When we compare the custody requirements of the Singapore Payment Services License with the custody requirements of the Hong Kong Virtual Asset Trading Platform License, we find that the latter has relatively stricter regulations,” said Liu Jia, founder of dtcLianGuaiy.

Cobo provides white-label solutions for multiple companies applying for Hong Kong licenses. COO Lily Z. King said that Hong Kong is indeed stricter than Singapore, whether it is in terms of the custody capabilities required by exchanges or the proportion of cold and hot wallets.

Xiong Wei has settled in Singapore and is optimistic about Singapore’s regulatory path, especially compared to Hong Kong, which has opened up trading for retail investors. “Hong Kong is somewhat anxious, with excessive promotion from the authorities, which may lead to major loopholes,” said Evervision, who has no plans to develop business in Hong Kong. “Currently, there are many speculative projects mixed in with low regulatory oversight, advertising on the streets.”

Xiong Wei’s concerns about Hong Kong are not unfounded.

On September 13th, the exchange JPEX was exposed for having a money laundering flow of over 190 million USDT. The Securities and Futures Commission of Hong Kong (SFC) specifically warned JPEX for promoting services and products to the Hong Kong public without a license. JPEX also had a booth at TOKEN2049 earlier this year, but immediately cleared the booth and staged an “on-site escape” after the incident was exposed.

In terms of the exhibition situation, Hashkey Exchange, which obtained a license in Hong Kong, has a disappointing trading volume for retail business. “What I understand is that KYC is too strict,” said Xiong Wei.

“Singapore and Hong Kong are actually complementary. If you want to empower the government and build infrastructure, go to Singapore. If you want to develop retail cryptocurrency trading, go to Hong Kong,” said Li Guoquan. “The only competition between the two places is talent.”

“But talent is also for stimulating consumption. Singapore used to need to attract a lot of talent, but now it’s already full. If it continues, housing prices and consumption will be too high. Hong Kong wants to attract up to 300,000 people, but it doesn’t need more. So there is no longer competition between Singapore and Hong Kong. Singapore has too many talents. Talent stays in Hong Kong for 6 months and in Singapore for 6 months, which I think is good.

For companies that want to have a presence internationally, they need licenses in both Singapore and Hong Kong. I think the final pattern is that each region has its own local exchanges, but each country only needs four or five. The rest are decentralized exchanges and other Web3 projects that empower the government.”

TOKEN 2049 Blind Carnival, Singapore “observing with cold eyes”

TOKEN2049 is held once a year, as the cryptocurrency market transitions from a bull market to a deep bear market. However, almost everyone is confident that the bull market will return next year with the halving of Bitcoin.

“The sentiment was better last year, as the bull market had not ended for long. This year, I invited some domestic OGs, but none of them came. However, the internationalization of this year’s event is better. This time, I also clearly see the difference in maturity between European and American projects and Chinese projects,” said Xiong Wei, who has organized the Arweave ecosystem conference at TOKEN2049 for two consecutive years, and he feels the stark difference in atmosphere.

Moreover, with the continuous actions of SEC regulation this year, more resources from Europe and the United States have shifted to Singapore, and the disparity between projects is evident. “European and American project teams are more inclined to attend conferences and discuss technology, while we mainly focus on looking at beautiful women,” sighed Xiong Wei. “The disparity is not insignificant.”

Although TOKEN2049 is crowded with people, not many are actually taking action. Xiong Wei told Foresight News that compared to last year, there are noticeably more cautious venture capitalists this year. “Last year, many investment institutions like Tencent came. After the FTX scandal, they completely withdrew from Web3. Now, traditional investment institutions are also entering the field, but with a different group of people.”

“Last year, we reviewed 1,000 projects and only invested in 9. We couldn’t find suitable ones to invest in.” Li Guoquan, not only a professor at Singapore’s NUS, but also one of the founders of BlockAsset Ventures, said, “During 2017 and 2018, there were many scams in mainland China, but the projects in Singapore were very good, and the ideas were much better than now.”

On TOKEN2049, the most unavoidable topic is compliance and regulation, with many project teams considering concepts tied to RWA as the next hot spot to ignite the bear market.

“But I see many experienced practitioners beginning to reject the noble spirit of Web3 itself – privacy protection. Everyone hopes to have more traffic and users to achieve compliance. But this will move Web3 further and further away, and it will become more and more centralized,” emphasized Li Guoquan. “Satoshi Nakamoto’s whitepaper was released in 2008, and 50% of its content was about politics and economics. It was during the financial crisis, and Web3 was meant to change Wall Street, not become Wall Street.”

“From last year to this year, it is obvious that most people are turning the cryptocurrency industry into another Wall Street. Now the entire financial market has already fallen into monopolies, but the essence of Web3 should not be a monopolistic market.” While most project teams view compliance as a way out, Li Guoquan said, “Now we should cooperate with the government to empower the government, but not let the government be the only regulator. These two points are different.”

“The government is now regulating us because they are disappointed in our industry. They feel that the industry lacks self-discipline and everyone is speculating. But even so, many Web3 projects are not regulated in Singapore. The Monetary Authority of Singapore says that we must innovate responsibly. Singapore itself has many regulations, and there are many projects in the sandbox that must be regulated. They also collaborate with us in the cryptocurrency community. Last year, the Monetary Authority of Singapore went to Africa to help African countries with inclusive finance and education. These countries really need our cryptocurrency industry.”

Professor Li Guoquan was engaged in the quantitative finance industry from 1993 to 2012, and then returned to the school as a professor in 2012 until this year when he “returned to the arena.”

As for the reason, Professor Li Guoquan said that it is because he sees the combination of AI and blockchain and feels that the timing is truly ripe. Foresight News noticed that when Professor Li Guoquan was interviewed, the entire wall behind him was filled with books. “When we were young, it was the same. It’s great that young people want to use quantitative finance, financial technology, and cryptocurrency to make money and have entrepreneurial spirit. But at the same time, don’t forget that what you do should be beneficial to society, environmentally friendly, reduce speculation, increase trade, and solve political and economic issues. But now I see many whitepapers, many business models. They are not sensitive to the economic and political situation, they are only sensitive to regulations, which is a much lower level.”

Li Guoquan has also served as a member of the Financial Research Committee of the Monetary Authority of Singapore (MAS). He shared MAS’s stance at the SUSS event this year, “I hope Web3 is not used for speculation, but to solve the bottlenecks in human development, including trade.”

As for why MAS did not participate in TOKEN2049, Li Guoquan analyzed, “TOKEN2049 has not yet grasped the key points of Web3. If it wants to become an activity that is regulated, it must be environmentally friendly, beneficial to trade, or beneficial to inclusive finance. We don’t want to be a lower level and become part of the regulated system, but to bring blockchain technology to various places on an equal level. Only after TOKEN2049 or Web3 changes its speculative image can we see the emergence of regulatory agencies.”

“There will be fewer and fewer speculators in the future. Not everyone needs to be compliant. 20% should focus on compliance, 20% on anti-money laundering technology, 20% on inclusive finance, 20% on inclusive education, and 20% on projects that collaborate with the government. This is the truly innovative industry.”

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