Is Dubai stealing Singapore’s thunder in crypto?

There’s a saying that when your taxi driver starts telling you about Bitcoin, that’s when it’s time to sell.

That’s because when an asset sees a flood of retail investors, it could be a sign that it has reached speculative territory. And when the man on the street takes notice, so will the regulators.

While 2021 may go down as the year that crypto adoption took off and became mainstream, it was also a trying year for crypto companies in Singapore looking to gain legitimacy from one of the world’s toughest regulators.

In January, Singapore’s central bank warned crypto providers against marketing their services in public areas. These include using online or print advertisements, as well as hiring social media influencers to promote their services.

Amid that backdrop, financial hubs in the Middle East are gaining popularity as alternative crypto-friendly jurisdictions for firms seeking homes. Binance, the world’s largest cryptocurrency exchange by trading volume, led the charge when it withdrew its application for a license in Singapore in favor of Dubai.

It appears that many are following suit, or considering a similar move. “The trend is obvious. Businesses are moving away,” Anndy Lian, chairman of Netherlands-headquartered BigOne Exchange, tells Tech in Asia. With the exchange’s core market in Latin America, Lian says his company has no plans to apply for a license in Singapore. He adds that most crypto firms moving out of the city-state are eyeing markets like Dubai and Europe for their new homes.

Singapore is openly welcoming everybody, then openly rejecting almost everybody.

Binance itself has run afoul of regulators in several markets, including the UK and Japan. But Lian says that the firm had served as a litmus test for crypto firms looking to set up a base in Singapore. And as far as many were concerned, that test had gone south.

Binance declined to comment on this story.

A long queue

At the time of writing, just three out of around 170 firms who applied for a digital payment token (DPT) service license in Singapore have obtained one.

Over a hundred have withdrawn their applications or been rejected, while at least one has received a license in-principle. According to the Monetary Authority of Singapore (MAS), applicants who receive “in-principle approvals” are still required to “put in place necessary measures and fulfill certain administrative matters” before a license is officially granted.

The astonishing odds stacked against crypto hopefuls have led some to voice their frustrations that the city-state isn’t as welcoming as it seems.

“Singapore is openly welcoming everybody, then openly rejecting almost everybody,” Lian observes. “It makes people think, ‘is Singapore not a place that I can set up? Is Singapore not a place for me to house myself?’”

A waiting game

The allure of Dubai

No mass exodus