Since the Fintech boom started across the world, two Asian giants Singapore and Hongkong have always fought hard for the lead in the region. Singapore had better access to the ASEAN community to help Fintechs expand seamlessly, while Hong Kong has been historically seen as the gateway to China.
However, in my opinion, what gave Singapore a clear edge is the proactive and collaborative regulatory regime. The Monetary Authority of Singapore (MAS) along with the Financial Conduct Authority (FCA) have perhaps been the two most forward thinking regulators, who have helped Fintech boom in their markets.
The regulatory regime and its effectiveness (or the lack of it) on the innovation ecosystem has been a real case study with Blockchain. This is a detailed break down of what regulatory stance countries took on Blockchain. MAS have been quite collaborative when it came to both Blockchain and Cryptos.
China have shocked the world (as they do every other day), with their focus on AI and Blockchain. According to a study by Reuters, they have the highest number of Blockchain patents in the world in 2017 (225 of 406). In AI they are only second to the US with 23% of Global patents granted in 2017 in the field. However, China have taken a binary stand with Cryptos.
In contrast, MAS had published a set of guidelines for token offerings in 2017.
This may not be the most popular stance today: I believe, every country that has banned Cryptos and ICOs have pushed themselves behind in both technology innovation, and in the evolution of new capital markets, at least by half a decade.
China, perhaps may be an exception to that, as the innovation in Blockchain coming out of the country is mind boggling. But in general, it shows ignorance in the potential of the technology or even laziness to work with this ecosystem. The MAS on the other hand, haven’t banned cryptos. They have worked closely with the innovators to understand the potential and help them get it right.
While Blockchain is meant to be trustless, its hard for counterparties in a value network to trust each other primarily because of the technology involved. Its like asking someone to allow a self driving car to do the job on a busy motorway on day 1 (with eyes closed).
To jump through the trust barrier, MAS are setting up a secure platform to sell tokenised securities. MAS, SGX (Singapore Exchange), Deloitte and Nasdaq are working on this Delivery Versus Payments (DvP) platform to add trust to this ecosystem. This is a continuation of Project Ubin – whose first phase tested Digital currency (for SGD) and the second phase focused on RTGS.
With the five phased approach to Project Ubin, we may soon see a state issued digital currency. That would not only put Singapore ahead of its Asian peers, it may be a Global first.
Arunkumar Krishnakumar is a VC investor focusing on Inclusion, a writer and a speaker.
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