Starting a Cryptocurrency Company in Singapore

Staff Writer

January 12, 2022

What’s in the article?

Cryptocurrency has only been around for the past few years, but this relatively new digital currency has boomed an industry that opens opportunities for investors and traders alike. Cryptocurrency companies often deal with crypto exchange, and may act as payment services providers for various games, art, and other crypto assets.

Starting up a cryptocurrency business requires you to have substantial knowledge of the industry, and Singapore is one of the few economies that openly welcome crypto companies to incorporate in the country. In this article, we'll guide you through opening and setting up your crypto firm in Singapore.

How to Set Up a Crypto Company in Singapore

Setting up a crypto company in Singapore is similar to the incorporation process of other industries. However, the licensing framework of crypto businesses depends on the nature of the business.

For instance, business entities that focus on payment services must register under the Payment Services Act (PSA), while other companies may apply for a Major Payments Institution (MPI) Licence, or an In-Principle Approval (IPA).

Crypto companies operate like financial companies, but deal with blockchain technology, and digital assets. They often handle investments and trading, and licensed exchanges facilitate cryptocurrency payments from one party to another through a trading platform.

Why Incorporate a Cryptocurrency Exchange in Singapore?

Singapore has a favourable taxation system, and it also has a modern regulatory framework that covers a vast range of activities related to the financial system. This makes it a favourable destination for foreign investors all over the world.

The country is also open to blockchain technology, and is among a handful of countries in the world to have a Cryptocurrency and Blockchain Industry Association that is dedicated to small and medium-sized enterprises operating in this field. There are corporate experts at hand to assist those foreign investors who wish to incorporate a company in Singapore.

Overall, cryptocurrency exchanges tend to be set up in Singapore due to the country's ease of doing business, which provides clear requirements and sets regulations for various industries. A large number of citizens are also open to using digital payment tokens, and Singapore is a recognised business hub within Southeast Asia.

Cryptocurrency Exchange in Singapore

Singapore has many trading platforms including Coinbase, CoinHako Paxful, Indacoin, LocalBitcoins, Coinmama and the DBS Digital Exchange. You begin by setting up your account and then you may proceed to buy cryptocurrency of your choice.

When paying for your cryptocurrency you may use PayPal, a debit or credit card or bank transfer. Each of these methods attracts a given charge. Choose the method that is cheapest for you. You then carry out your trades by buying and selling your cryptocurrency of choice on the platform. Take note, however, that most cryptocurrency exchanges charge a commission for executing trades, which is typical in the crypto space.

Requirements for the Formation of a Cryptocurrency Exchange in Singapore

If one wishes to open a Singapore cryptocurrency company, they must first register one of the types of structures recognized by the Commercial Law. For a financial company to explore the cryptocurrency field, they require to obtain a special licence pertaining to the cryptocurrency services to be provided.

IT companies do not require any special permit with the Monetary Authority of Singapore for them to issue cryptocurrency. Once permits and licences are secured, the company can accept local and international clients, feature a digital wallet, conduct an initial coin offering, and other crypto services.

All companies are required to comply with the anti-money laundering regulations imposed by the Monetary Authority of Singapore. These regulations are put into place so as to offer protection to the clients and investors in the instance of cryptocurrency funds.

The cryptocurrency field is one of the newest and most sought types of businesses to be started in the financial technology sector of Singapore. The Singapore government has made some interventions to help every crypto startup open a corporate bank account locally.

Singapore aims to bridge the gap between crypto startups and financial institutions through its government regulations. Cryptocurrency startups can have the security of a bank account to handle fiat currencies, while financial institutions enter the crypto industry.

How Singapore Became the Global Centre for Crypto Business Development

Singapore quickly grew to a highly developed and powerful country with one of the highest standards of living, and progressive economy. The government is devoted to ensuring a successful development by catching up with technological progress, including digital assets.

The country has a policy that is progressively open to innovations. This led to many investors choosing Singapore as a business area, as experts have lauded Singapore as a strong base for launching a crypto business.

Singapore also has comparatively softer legislation towards non-residents. The regulators in Singapore are interactive with the crypto enthusiasts. The only detractor to cryptocurrency businesses in Singapore is the banks. These display some peculiarities of Asian culture.

Decisions take time and negotiations are gradual and they take several stages. The local banks are still suspicious of cryptocurrency transactions. They even block funds for significant periods of time. They then require extra reports on the purposes of the transactions as well as other information for them to allow the transaction to be carried out.

The gap between cryptocurrency companies and financial institutions continues to challenge crypto companies from entering the market. However, the Singaporean government is taking measures to encourage a balance between the two, and stay open to innovative payment solutions.

Characteristics of Cryptocurrency Trading

  • Cryptocurrency markets are very volatile. The value of cryptocurrency is not based on fundamentals such as the case of stocks that are based on the intrinsic value of a firm.
  • Due to the volatility of the markets, the tactic of leveraging to trade presents a high risk while trading. Therefore, you cannot compound on that risk by borrowing on a trade.
  • You could very easily end up losing money you did not have in the first place. Being a new form of currency that is still considered a niche market, scammers make use of the anonymity and limited knowledge of common folk for fraudulent activities.
  • The government is sensitive to the needs of cryptocurrency businesses and they attract more foreign investments.
  • Taxation in the country is flexible. For those companies registered in Singapore, yet their offices and employees are in other countries, they can completely avoid taxation since they are exempt.

Digitising Your Company

WealthBridge is your leading partner in corporate services, as our team can handle the incorporation of your Singapore company. Focus on developing and securing your platform, while we handle the rest, and manage your company stress-free!

Give us a call, or send us a message to get started on your incorporation! 

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