John Ng Extends Invitation to Web3 Firms Amid Singapore's Tightened Crypto Regulations
Digital token service provider Johnny Ng voices his opinion on Singapore's licensing regulations, emphasizing Hong Kong's encouraging regulatory conditions for Web3.
In response to Singapore's updated rules for digital token service providers, Hong Kong legislator John Ng has extended a warm invitation to Web3 companies. On June 4, Ng announced on X, contrasting Singapore's and Hong Kong's approaches to virtual asset regulations. Emphasizing the welcoming ecosystem created by Hong Kong's 2022 policy, he encouraged businesses to consider relocating.
Ng's statement follows the Monetary Authority of Singapore's (MAS) enforcement of stringent conditions on local firms, affecting crypto services offered overseas. These changes are due to the Financial Services and Markets (FSM) Act 2022.
Singapore's Strict Crypto Regulations: A Mounting Burden for DTSPs
The MAS issued new guidelines to closely monitor crypto activities linked to Singapore-incorporated firms. By June 30, all Singapore-based Digital Token Service Providers (DTSPs) must cease overseas services unless they have secured a rare license. There's no grace period to ease the transition.
Licensing exemptions are scarce. Only applicants who meet significant capital thresholds and rigorous anti-money laundering (AML) and counter-terrorist financing (CFT) measures qualify. MAS cited high financial crime risks associated with cross-border crypto activities as the reason for the strict licensing criteria. Granting licenses will only occur in "extremely limited circumstances." All applicants must deposit S$250,000 and pay an annual fee of S$10,000. No special exemptions are available for startups.
Compliance or Exit: Limited Options for DTSPs
The new Singapore guidelines leave little room for flexibility. The MAS will issue a four-week notice before enforcing the rules but expects compliance by the deadline. Failure to obtain a license necessitates the suspension or termination of international operations. Violators could face fines of up to S$250,000 and imprisonment for up to three years. This new rule also applies to individuals working for foreign crypto entities while in Singapore, unless they qualify for exemptions.
MAS Bans Bearer Instruments and Implements New KYC Measures
The MAS has also banned bearer instruments, prohibited large cash payouts, and expanded customer due diligence requirements. Legal experts, such as Hagen Rooke of Gibson, Dunn & Crutcher, advise immediate restructuring strategies to minimize compliance risks. Many industry players believe the stricter regulations may accelerate relocation to jurisdictions with more balanced crypto frameworks.
A Opening for Hong Kong as Region's Crypto Hub
With Singapore's new guidelines now in action, Hong Kong may take the upper hand as a regional crypto hub. John Ng's invitation reflects growing faith in Hong Kong's regulatory landscape. The city remains committed to promoting clear yet supportive virtual asset policies, appealing to numerous Web3 companies since 2022. Faced with limited options, digital token firms need to make quick decisions—adapt to the rules or seek more lenient jurisdictions like Hong Kong. John Ng's offer serves as a call-to-action for those exploring relocation.
Comparing the Regulatory Environments of Singapore vs. Hong Kong
Singapore's regulations have become stricter, potentially driving up compliance costs and encouraging Web3 companies to venture to more crypto-friendly locations like Hong Kong. Hong Kong offers a favorable regulatory environment with tax incentives, a clear classification system for digital assets, and active development of its Web3 industry. Singapore, focusing on safeguarding its financial system and reputation, might face an exodus of talent and capital as a consequence.
[1] Monetary Authority of Singapore - Changes to regulatory framework for Providers of Digital Payment Token (DP Tokens) Services
[2] Securities and Futures Commission (SFC) - Virtual Asset Trading Platforms (VATPs) under the Securities and Futures Ordinance (SFO)
[3] Finance Magnates - Hong Kong Vs Singapore: Which City is Winning in the Blockchain Race?
[4] Crypto News Asia - Multiple reasons behind Hong Kong's adoption of blockchain and crypto
[5] Cointelegraph - Hong Kong’s Securities Regulator Releases Guidelines for Crypto Derivatives
In the wake of Singapore's stricter crypto regulations and high compliance costs, the inviting regulatory environment in Hong Kong is gaining traction among Web3 companies. With its tax incentives, clear digital asset classification system, and active Web3 industry development, Hong Kong represents an appealing destination for digital token firms seeking lenience. John Ng's invitation to Web3 companies to consider relocating amid Singapore's updated rules emphasizes this shifting landscape.
