Trades are continuing for binance.sg, which offers a platform for residents here to trade in cryptocurrency even as its parent Binance.com was hit by a warning from the Singapore regulator yesterday.
The ruling by the Monetary Authority of Singapore (MAS) ordered the Binance.com site to halt payment services to residents in Singapore and to cease soliciting business from Singapore residents for possibly breaching the Payment Services Act.
The financial regulator has also placed Binance.com on its Investor Alert List to warn consumers that the website is not regulated or licensed to provide any payment services.
Binance Asia Services (BAS) which runs the binance.sg platform, has applied for a licence under the Payment Services Act. It also supports the Singapore dollar.
Users open an account in binance.sg with Singapore currency which can be used to buy stablecoin, a crypto that is pegged to fiat money. The most common stablecoin used is called USDC, which is backed by the US currency. Users then use the USDC to undertake the crypto swaps.
In a media statement, BAS clarified that binance.sg is a separate legal entity from binance.com with its own local executive and management team. Richard Teng, previously a senior executive with MAS and Singapore Exchange, was just appointed CEO of Binance Singapore last week.
Binance Singapore is solely focused on growing the Singapore cryptocurrency ecosystem and servicing users in the Republic, said the statement, adding that it also does not offer any products or services via the binance.com website or other related entities, and vice versa.
Crypto enthusiasts who spoke to Techgoondu are relieved that they can continue to exchange for top digital currency pairs on the market. Donovan Tan, CEO of marketing agency Loupe, who has been investing in crypto for nearly two years, is leaving his investments in binance.sg for now.
He said the MAS ruling is a warning to crypto investors to be careful. The regulator is concerned that consumers maybe lose their savings to crypto savings.
Mock Pak Lum, a blockchain fund and crypto investor, says that users who are concerned with binance.sg can trade on regulated exchanges such as Gemini.
Other crypto exchanges that support the Singapore currency include crypto.com, Coinbase and Independent Reserve. DBS has also set up a crypto exchange but it is restricted to its high net worth customers.
According to a blog on binance.sg, investors who want take out their investments can use the withdrawal function on the website provided by Singapore-founded payments platform Xfers Direct.
Binance, the world’s largest crypto exchange, has attracted the ire of financial regulators in several countries including Japan, Malaysia, Britain, Italy and the Netherlands who are unhappy that it is operating as a financial institution because they sidestep rules protecting consumers and threaten financial stability.
Crypto exchanges are based on the concept of decentralised autonomous organisation (DAO) which is represented by rules generated by software code, controlled by organisation members – in this instance the exchanges – and are not influenced by a central government.
Since the rules are defined by code, no managers are needed, thus removing any bureaucracy hurdles associated with banking networks which take a small fee for every stage of the payment process.
The DAO is the opposite of this system and reduces much of the costs. The challenge for financial regulators is that DAOs may impose an infrastructure of their own.
This is a technology which will be hard to push back. The financial regulators and banks are already attracted to DAOs and have introduced their own stablecoins and even crypto.
As blockchain and crypto investor Mock puts it plainly: “The challenge is how to regulate DAOs as they decentralised and not domiciled in any country.”
The situation could well be that regulators will watch and see which jurisdiction will be the first to embrace crypto as this is the way forward.
A version of this story appeared on graceblockchainblog.