Behind Singapore’s meteoric rise as a top blockchain hub

Image credit: Tech in Asia

Whichever tech circle in Singapore you move in, chances are you’ve heard about another exciting new initial coin offering (ICO) that’s launching. ICOs – also known as token sales – are fast becoming the great Gold Rush of the 21st century and, perhaps, the ultimate equalizers of fundraising. And Singapore has become the new California Dream for some intrepid blockchain explorers.

Pavel Bains is one of them. A Canadian from Vancouver, he moved to Singapore two years ago with aspirations of selling his blockchain enterprise to all the major banks and financial insurers. “My co-founder and I decided that we didn’t want to set ourselves in New York or Canada because one, the banks wouldn’t entertain us, and two, the customer base wasn’t really there,” says the CEO and co-founder of Bluzelle, a company which uses the technology to decentralize enterprise solutions.

Bains’ gamble paid off. Bluzelle closed a US$1.5 million series A round last year, raised US$19.5 million in an ICO in January, and announced a fresh million-dollar investment in March.

“To be honest, historically I don’t place any faith in governments to encourage new technologies, and our first thought was that our customer base was in Singapore so we should be here,” says Bains. “But at the end of the day, the Singaporean government did follow through on their commitments, and they are very supportive of the ecosystem.”

While the company’s 10-person tech team remains in Vancouver, five other members are based in the city-state. By physically setting up his team in Singapore, Bains hopes to take advantage of its outlook on cryptocurrencies, which is relatively liberal compared to most of its neighbors and the rest of the world.

To regulate or not to regulate?

One clear advantage that entrepreneurs have in Singapore is the clarity on what is allowed and what isn’t. While countries like China and India are cracking down on cryptocurrencies and any trading related to them, including token sales, Singapore seems to be setting down the rules of engagement rather than banning digital currencies outright.

“From a regulatory perspective, the government recognizes that there’s something big that’s happening,” explains Prakash Somosundram, a seasoned Singaporean tech entrepreneur who made his fortune building websites in the 1990s and 2000s and now curates conferences about blockchain. “And by allowing innovation to actually take place, we will be able to figure out what’s going to be the long-term value to the local ecosystem,” he adds.

Singapore is now the third-biggest market for token sales globally after the US and Switzerland. And according to Somosundram, “it is still one of the cheapest places to do an ICO compared to other countries, in terms of registering a company, legal fees, and all the other support-related services that you require during an ICO.”

Asia Pacific is the world’s fastest-growing region in economic terms, resulting in more entrepreneurs and tech companies committing boots to the ground and moving lock, stock, and barrel to regional hubs like Singapore.

“To stay competitive, Singapore has been trying to stay ahead of the technology curve,” says Soh Siow Meng, Asia technology market analyst at GlobalData. “This often means making regulatory changes to facilitate the adoption of new technologies, providing funding support where appropriate, and working with various education and industry bodies to develop the right talent.”

Compared to the rest of the region, Singapore is often seen as a good test bed for developing technologies. There are many instances of blockchain entrepreneurs relocating from China, South Korea, and India to take advantage of the liberal regulations in the city-state.

Roadblocks ahead