At the time, people from all over the world would go to Singapore to acquire and sell cryptocurrencies.
It was evident from the start that officials intended to employ blockchain technology. This, together with the city-favorable state’s economic climate, drew digital asset firms and an increasing number of investors.
According to KPMG, the amount of money invested in the industry in Singapore in 2021 will be $1.48 billion (£1.2 billion), 10 times what it was the previous year. This represented nearly half of the money invested in Asia Pacific for the entire year.
Why Singapore is taking a hard stance
In 2022, nothing could have been different.
Many Singapore-based crypto assets and companies have gone bankrupt, causing losses worldwide.
First, a popular token called Terra Luna crashed, which caused its stable sister token, TerraUSD, to crash.
A few months later, the Singapore-based hedge fund Three Arrows went bankrupt, bringing down the cryptocurrency exchange Voyager Digital. Then, in August, Hodlnaut, a company that lent money in cryptocurrency, became the latest failure.
The closing of key market players this year has taken $1.5 trillion off the value of the market.
Then, in November, billions of dollars were lost quickly when the US cryptocurrency exchange FTX crashed because it ran out of cash. Since then, US authorities have charged FTX’s founder, Sam Bankman-Fried, with “one of the largest financial frauds in US history.”
The fall of FTX was especially shocking for Singapore. Over a few months, Temasek’s state investment fund put $275 million into the exchange.
The fund is worth more than $295 billion, so the FTX investment is just a small part of its public wealth portfolio.
But Singapore’s deputy prime minister and finance minister said that the loss had hurt Singapore’s reputation.
Many people think the government of Singapore should have done more to help investors who lost money.
Nicole Yap, 26 years old, says that she didn’t think twice about investing in the exchange because so many big companies supported it. Because of this, she has lost about $150,000 (£122,000), but she doesn’t think the user should take all the blame.
Carol Lim started to invest in cryptocurrency during the pandemic. The 52-year-old man wanted to make enough money to retire in the next few years.
The central bank of Singapore said that Hodlnaut and a few other companies could offer digital payment services. But the lender had to stop withdrawals because of how the market was doing, so the license was taken away.
Mr. Gronager says that because consumers are spread worldwide, regulators must decide if they should put laws on the company, like giving them a license to work in the country or limiting retail investors’ access to trading.
To do business in Singapore, FTX had to have the right paperwork. On the other hand, MAS has said that local users can’t be stopped from using services from other countries.
“It’s no surprise that fraud and easy money will happen in business. But, unfortunately, we see it on the internet and in many older enterprises, “Mr. Gronager says.
Even before the FTX scandal, Singapore had taken new steps to warn people that technology can be unstable and dangerous. It has banned crypto advertising this year and is looking into several outlets on the island nation.
Binance, the biggest exchange in the world, left Singapore last year after being put on an alert list for investors because it was trying to get customers without the right license and trading Singapore dollars.
Like Brian Armstrong, co-founder and CEO of Coinbase, people in the industry have been critical of the crackdown.
“Singapore wants to be a hub for Web3,” he said at the Singapore FinTech Festival in November. Web3 is a vision of the next version of the internet that uses blockchains and cryptocurrencies. “But we won’t allow retail trading or wallets you host yourself.”
Singapore’s government is still interested in cryptocurrencies and wants to make the country a center for virtual assets by focusing on blockchain technology’s business and government sides.
It has promised to limit risks by suggesting that small investors take tests to see how much they know before they can trade. But it has been said that this could make retail-focused businesses move elsewhere.
FTX owes its largest creditors $3.1 billion
According to a court filing, the cryptocurrency exchange FTX owes its 50 biggest creditors almost $3.1 billion (£2.6 billion).
Last week, the troubled company in the US filed for bankruptcy. It says its top 10 creditors are owed $1.45 billion, but it hasn’t named any of them.
People lost faith in a market that was already in trouble after the second-largest cryptocurrency exchange in the world failed.
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It also led to the arrest of Sam Bankman-Fried, who was in charge of the exchange.
Previous bankruptcy filings for FTX showed that after the company went bankrupt, more than a million people and businesses could be owed money.
People who put money into the exchange are still trying to figure out how much they will get back at the end of the bankruptcy process, but many experts have warned that it may be only a small fraction of what they put into the company.
Mr. Bankman-Fried told the news website Vox that he regretted filing for bankruptcy because it took away most of his control over his money. He also didn’t like the people in charge of the economy.