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Techgoondu > Blog > Internet > Binance to cease trades in Singapore, focus on blockchain innovation
InternetSoftwareUncategorized

Binance to cease trades in Singapore, focus on blockchain innovation

Grace Chng
Last updated: December 13, 2021 at 11:06 PM
Grace Chng Published December 13, 2021
7 Min Read
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  • PHOTO: Mikhail Nilov from Pexels

Binance, the world’s largest global cryptocurrency exchange, has dropped its application to operate a regulated exchange in Singapore. The announcement by the firm’s Singapore entity, Binance Asia Services (BAS), ends an effort that started last year to win approval from the Monetary Authority of Singapore (MAS).

All trading will cease on Feb 13 2022. All users must close all open positions and withdraw their Singapore dollar and cryptocurrency assets by that date, said a statement from BAS.

Binance Asia will now refocus its operations on blockchain technology and innovation, adding that it will explore a number of Singapore-based initiatives, including incubation programmes, blockchain education and further investment opportunities.

The company was among 170 firms that applied to MAS for a permit to provide cryptocurrency services. Insiders say that in recent months, several firms have dropped their applications.

Thus far, only four companies have received the licences under the Payment Services Act, to operate crypto exchanges. They are local firms Fomo Pay, Coinhako and DBS Vickers, and Australian company Independent Reserve.

However, their trading volumes are tiny compared to Binance, which is by far the largest fiat-to-crypto exchange with a 24-hour trading volume of over US$14.6 billion. It has trades on more than 400 cryptocurrency.

Open to all retail and institutional traders, it supports over 40 fiat currencies including the US, Canadian, British, Japan, Mexico, Singapore and Israeli currencies.

As a comparison, listed crypto exchange Coinbase is a distant second with about US$3.2 billion in 24-hour trading volume. It supports only 140 crypto coins and three fiat currencies, namely US Dollar, Euro and British Sterling.

Over the years, Binance had rapidly became the place for crypto enthusiasts to trade almost any digital asset. It has aggressively added new cryptocurrencies very quickly, unlike its competitors which take time and have a process for adding new cryptocurrency for trading.

It also has expanded with more services including NFT auctions, crypto-based loans and crypto market futures. These services, say insiders, appeal to investors including consumers looking to speculate on the hot new crypto market.

However, Binance has been under fire in many countries including the US, England, Japan, South Korea, Malaysia and Thailand. The financial regulators say Binance has been operating without approval and its role in money laundering and tax evasion.

In Singapore, BAS stopped providing payment services in Singapore after MAS censured it in September that it might be breaching the Payment Services Act. It withdrew its app from the Singapore Apple and Google app stores and stopped offering SGD trading payment options.

Binance was also placed on MAS’ Investor Alert List to warn consumers in Singapore that the company was not regulated or licensed in Singapore to provide any payment services. However, savvy consumers could also link to binance.com for market making activities.

Then there is the mystery of Binance’s headquarters. Financial regulators have trouble grappling where Binance is headquartered.

Founded in July 2017 in China, the company moved to other countries after the Chinese government cracked down on crypto mining. It has several entities around the world but no headquarters. The company has preferred to be a decentralised company, a structure true to the nature of blockchains on which cryptocurrencies are based.

For a time, there was speculation that Binance may settle in Singapore, since CEO Changpeng Zhao is based in the Republic. The speculation, well, remained just that.

Insiders say the numerous services Binance offers make for a complex business. It has to jump through many regulatory and compliance hurdles, all of which means a trading licence is long time in coming.

Chia Hock Lai, co-chairman of Blockchain Association Singapore, said that since Binance found it hard to get licensed as a crypto exchange, it decided that it might be better to withdraw.

Singapore’s cryptocurrency friendly environment has attracted many global crypto companies to be based here. They view Singapore as a key Asian node as interest in cryptocurrencies soars to an all-time high in Asia Pacific.

According to the latest survey by Mastercard, 45 per cent of consumers in Asia-Pacific are considering using cryptocurrency within the next year, higher than the global average of 40 per cent.

Will Binance ending its trading business in Singapore dent its reputation as a cryptocurrency hub?

Edward Chen, CEO of Huobi Singapore, did not think so. “My personal take on this is that the Singapore government sees the potential of blockchain and crypto tokens, and they are keen to develop cryptocurrency technology by putting in place strong regulations to mitigate risks for the local market,” he said.

“Singapore is going to be a key player for cryptocurrency-related businesses and right now, she is the forerunner while the rest of the world grapple with how to treat or regulate this,” he added.

Besides, Singapore welcomes promising technologies such as cryptocurrencies and blockchain, he said. Huobi Singapore, a subsidiary wholly owned by Huobi Technology Holdings Limited (Huobi Tech), is a leading global digital assets exchange platform based on blockchain technology.

Chia says that since Binance has stated that Singapore will remain as their blockchain innovation centre, “it is still consistent with the narrative that Singapore is a very important blockchain hub”.

Binance has already made an effort in this area when it launched the Binance Smart Chain US$100 million accelerator fund about a year ago to support development of the blockchain ecosystem.

Blockchain institutional investor Adrian Chng said that there are other options for Binance to still participate in Singapore. He points to Binance’s investment in Singapore-based Hg Exchange, which is Southeast Asia’s first member driven private securities exchange. It has a Recognised Market Operator licence from MAS.  

Moving forward, the industry could see more activities from Binance to develop the blockchain ecosystem and upping its investment activities in the blockchain related companies, say market watchers.

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TAGGED: Binance, blockchain, crypto exchange, cryptocurrency, MAS, Singapore

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Grace Chng December 13, 2021
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By Grace Chng
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A seasoned writer, author and industry observer, Grace was the key tech writer for The Straits Times for more than three decades. She co-founded and edited Computer Times, later renamed Digital Life. She helmed this publication, the de facto national IT magazine, for nearly 19 years. Grace is also the editor and co-curator of Intelligent Island: The Untold Story of Singapore’s Tech Journey, a book highlighting Singapore’s ICT development.
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