In light of the recent FTX crash, Singapore’s crypto trading field has been largely affected. Because FTX was the dominant platform in our nation, we have had nowhere to trade crypto since.
Or so we thought.
Trading Restrictions on Crypto Exchange Binance Have Been Eased
Some Singaporean users now say they can access cryptocurrency exchange Binance. Previously, the platform was banned in Singapore and was also placed on Singapore’s Investor Alert List.
A check by The Straits Times found that some users here can now use Binance to trade crypto. However, some others reported that they were still unable to do so.
Chief executive of trading platform Alpha Impact Mr Hayden Hughes said that he used to be able to only trade futures and margins but is now able to trade crypto.
“Binance lifting the block for Singapore users is great news, and means that Singapore users now have the ability to trade on the leading crypto exchange,” Mr Hughes said.
The Binance Ban
Originally, in September 2021, the Monetary Authority of Singapore (MAS) had ordered Binance to cease operations in Singapore. They could no longer provide payment services in Singapore and solicit business from Singapore residents.
According to a spokesperson from MAS, it was suspected that Binance “may be in breach of the Payment Services Act for carrying on the business of providing payment services to, and soliciting such business from Singapore residents without an appropriate license.”
In compliance with the order, Binance said that users in Singapore “will not be able to access certain functions on Binance.com including fiat deposit services, spot trading of cryptocurrencies, the purchase of cryptocurrencies through fiat channels and liquid swap.”
Simply put, their mobile app usage would be restricted and users would not be able to trade crypto.
In the same month, MAS also placed Binance.com on its Investor Alert List (IAL). This was in warning to consumers in Singapore that Binance was not regulated or licensed in Singapore to provide any payment services.
While this was all happening, Binance was applying for a Payment Services Act licence for Binance.sg for its Singapore operations. However, they withdrew their application in December 2021.
Under increasing scrutiny and regulations in Singapore, Binance finally pulled the plug on its operations in the Lion City in February 2022.
Binance took steps such as geo-blocking Singapore IP addresses and removed its app from Singapore app stores to demonstrate that it had stopped soliciting and providing services to Singapore users.
With this, Singaporean users were no longer able to trade crypto on the world’s largest trading platform.
FTX Transition and Aftermath
Since Binance was banned, the crypto geeks of Singapore set up shop in the second best platform, FTX.com.
“Many Singapore users were pushed to platforms such as FTX after Binance announced it was withdrawing its Payment Services Act license application last year,” Mr Hughes said.
As FTX racked up a significant number of Singaporean users, the impact was highly severe when it all came crashing down.
Many then faulted MAS for their dismissal of Binance but not FTX.
MAS Clears the Air
Why was Binance placed on the IAL and not FTX in the first place?
That was a popular question to MAS following the FTX crash.
MAS has stated that in the start, Binance had solicited Singapore users without a license. It offered listings in Singapore dollars and accepted Singapore-specific payment modes such as PayNow and PayLah.
On the other hand, there was no evidence of FTX courting Singapore users specifically.
MAS has also stated that Binance was never banned by them and it had merely listed them on the IAL.
MAS has added that FTX, like other entities, operate overseas. There are hundreds of such exchanges and thousands of other offshore entities that accept investments in non-crypto assets.
“It is not possible to list all of them and no regulator in the world has done so,” MAS noted.
With this, MAS has warned that dealing with any cryptocurrency on any platform has accompanying risks.
“Crypto exchanges can and do fail. Even if a crypto exchange is licensed in Singapore, it would be currently only regulated to address money-laundering risks, not to protect investors,” said MAS.
Many have also thought that it was possible to secure the assets of local users in FTX, through means of ringfencing their assets or ensuring that FTX backed its assets with reserves.
Unfortunately, MAS revealed that FTX is not licensed by MAS and operates offshore and hence is unable to do the above.
Even if a crypto exchange is well-managed, cryptocurrencies themselves are highly volatile and people “can lose all their money”, said MAS.
Long story short, know your risk before pouncing for the reward.
FTX is a cryptocurrency exchange system which promotes transaction of digital currencies.
In this market, users are able to link their crypto wallets and engage into digital transactions. They can place trades, enter into contracts, as well as buy/sell NFTs.
Started by Sam Bankman-Fried and Gary Wang in 2019, this platform originally saw hypergrowth. However, as it increased in popularity, it did not have enough to supply customer demands.
Many were sceptical about the solvency of the company (the ability to meet long-term debts and financial obligations) and worried that they stood to lose all their money. As such, they withdrew from the market.
This led to the collapse of the FTX empire, with its share price pummelling.
With the brouhaha of crypto news now, everything is unpredictable.
The news might be more volatile than the cryptocurrencies themselves for all we know.
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Featured Image: Binance / Wall Street Journal
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