Singapore's Stringent Digital Asset Laws Upset Crypto Entrepreneurs, Buterin Being Latest

Ethereum co-founder Vitalik Buterin has become the latest crypto entrepreneur to criticize Singapore's crypto regulations. The city-state is planning to clamp down on retail crypto trading.

Buterin sees Singapore's "skeptical approach" to cryptos, as a hindrance to its ambition to become a crypto hub. In an interview with The Straits Times on Sunday, he called it "weird" to only embrace blockchain tech, but leave out cryptos.

"The reality is if you don't have cryptocurrency, blockchains that you're going to have are just fake and nobody's going to care about them," Buterin said in a video interview. There is a "tight connection and you can't really have one without the other."

Some countries like India and China have similar approaches and China already banned crypto trading and mining in September 2021. As a result, many crypto firms fled to Singapore and other crypto-friendly jurisdictions.

Singapore has been stringent on crypto regulations, especially after the collapse of Terra Labs earlier this year. The financial regulator, the Monetary Authority of Singapore (MAS), proposed a fresh set of regulatory measures in October including stablecoin regulation.

SG Approves Only 17 Crypto Licenses Out Of 180 Applicants

The MAS has so far granted an in-principle license to operate crypto services, to 17 exchanges and firms, including Coinhako, Luno, Paxos and crypto.com, out of 180 applications.

These figures suggest that despite earlier claims that a clear regulatory framework would provide a solid foundation for Singapore to establish itself as a leading crypto hub, the stringent rules have in fact weeded out several startups, including Binance and Huobi.

Singapore's changing stance toward crypto businesses has set more regulations, which are expected to hit the market in the coming months. The regulator unveiled plans to curb retail investor access to crypto trading, in order to reduce risks associated with volatility.

Speaking about Do Kwon, the CEO of the failed stablecoin and lending firm Terraform Labs, Buterin noted,

"It's definitely true that if a country is not smart about it [crypto regulation], they can easily end up being stuck as the base for all of the Do Kwon people. And that's not necessarily something that country would want. But on the other hand, I think it's definitely possible to engage productively and get a lot of benefits."

Coinbase CEO Brian Armstrong recently voiced his concerns noting that Singapore aims to be a "Web3 hub," but not allowing retail trading. Speaking alongside Sopnendu Mohanty, chief fintech officer of the MAS at the Singapore FinTech Festival 2022, Armstrong said, "I would like to see Singapore embrace retail trading and self-hosted wallets."