Once hailed as 'Asia's Crypto Paradise', Singapore's crypto industry is now undergoing an unprecedented upheaval. The new regulations effective at the end of June are like a bombshell, creating waves in the industry, with the Chinese crypto legion being the first to bear the brunt, facing severe challenges.
1. Three Major Killing Moves of the New Regulations, No Dead Angle Strangulation
(1) License Extinction Order
The Monetary Authority of Singapore (MAS) has clearly stated that unlicensed exchanges must shut down by the end of June, which is undoubtedly a 'death sentence' for trading platforms that operate outside regulation. Referring to the Hong Kong JPEX-style exit, exchanges without a legal license will completely lose their survival space in Singapore. In the past, some small cryptocurrency exchanges attempted to operate in the gray area, taking advantage of Singapore's relatively loose policy environment, but the new regulations have left them nowhere to hide.
(2) KYC Totalitarianism
In Singapore, once on-chain transfers exceed 1,000 Singapore dollars (about 5,000 RMB), an automatic alarm mechanism is triggered. This measure has made anonymous transactions a thing of the past; any transfer exceeding the limit will be monitored by regulatory authorities. In the past, cryptocurrencies were favored by some investors for their anonymity, and some criminals also used this to conduct illegal fund transfers. Now, this situation has been effectively curbed, and every large transfer made by investors will be strictly scrutinized.
(3) DeFi Strangulation Order
Unauthorized smart contracts are directly classified as illegal, which is a heavy blow to the development of decentralized finance (DeFi). Once, the 'decentralized ideal' advocated by Vitalik Buterin attracted countless followers in Singapore, and various DeFi projects sprang up like mushrooms after rain. Now, projects with unauthorized smart contracts have instantly turned from legal to illegal, and many are facing rectification or shutdown. A founder of a leading project lamented: 'Yesterday we were discussing Web3 at Marina Bay Sands, today our office was raided.' This huge shift has thrown the entire industry into panic.
2. The Last Days of the Chinese Harvesting Team
(1) The 'Harvesting Formula' of the Golden Age
From 2017 to 2022, there was an unwritten rule in Singapore's crypto industry - 'Singapore Foundation White Glove + Chinese White Paper Packaging + Blocking Local IPs to Target the Mainland'. Many projects used Singapore foundations as a cover, attracting investors with meticulously packaged Chinese white papers, and then aimed at the mainland market by blocking local IPs. Data shows that 90% of projects that issued tokens in Singapore eventually went to zero, but the founders of these projects made a fortune, some even living in the presidential suite of Marina Bay Sands. For example, a certain 'AI + DeFi' project raised 200 million RMB under the banner of innovation, and the team quickly disbanded after cashing out, leaving many investors with nothing.
(2) From 'Escape Paradise' to 'Liquidation Hell'
In 2022, China cracked down on the crypto industry, causing many crypto practitioners to panic and charter flights to Singapore overnight, viewing it as a new safe haven. However, the good times didn't last long; the FTX collapse in 2023 caused Singapore's sovereign fund Temasek to lose $275 million, which completely enraged the Singapore government, leading to a 180-degree turn in its regulatory attitude, shifting from relatively loose to 'total annihilation regulation'. Once believing they had found a paradise, crypto practitioners now find themselves trapped in a 'liquidation hell'.
3. Industry Earthquake: Some Cry While Others Laugh
(1) Beneficiaries
- Compliance Giants: Large cryptocurrency exchanges like Binance and Coinbase, benefiting from their already obtained license advantages, not only remained unscathed in this regulatory storm but also seized market share. They attracted a large number of users fleeing from unlicensed exchanges with their complete compliance systems and strong financial strength.
- Hong Kong Poaching: Hong Kong has seen the opportunity brought about by Singapore's tightening regulations and launched the 'Crypto Entrepreneur Visa' overnight, actively poaching crypto teams from Singapore. With its unique geographical location and financial advantages, as well as a relatively open attitude towards the crypto industry, Hong Kong has become a new target for many crypto practitioners.
(2) Hard-hit Areas
- Chinese Capital Schemes: Some Chinese-led capital schemes have suffered heavy losses, with a certain USTC imitation team announcing its dissolution, and the founder has lost contact. These capital schemes were already operating on the legal edge, and the introduction of new regulations has deprived them of their survival ground.
- Local OTC Market: The local OTC market in Singapore has also been severely impacted, with the USDT to Singapore dollar exchange rate plummeting by 3%. Speculators have been selling off their cryptocurrencies, triggering a severe liquidity crisis. Many investors relying on the OTC market for trading are facing the dual dilemma of asset shrinkage and trading difficulties.
4. Retail Investors' Emergency Risk Avoidance Guide
(1) Act Immediately
Retail investors should quickly withdraw funds from small exchanges to cold wallets to avoid price drops caused by regulation and the potential risks of small exchanges running away. Storing cryptocurrencies in cold wallets can maximize asset security and prevent losses due to exchange issues.
(2) Account Zeroing
Deregister bank accounts and crypto entities in Singapore to cut off potential legal risk chains. In the current strict regulatory environment, retaining related accounts and entities may bring unnecessary trouble; timely zeroing can keep oneself away from potential legal risks.
(3) Strategic Shift
Closely monitor the policy window periods of Hong Kong's 'Sandbox Regulation' and Dubai's 'Crypto Free Zone'. These regions currently have relatively friendly policies towards the crypto industry, providing new options for investors. When making strategic moves, investors should fully understand local policies and regulations, conduct risk assessments, and make cautious decisions.
The huge change in Singapore's crypto industry is a fierce collision between regulation and industry development. For the entire crypto industry, this may be an opportunity for a reshuffle, prompting the industry to develop in a more compliant and healthy direction. But for the practitioners and investors involved, how to survive this storm is the most urgent task.
