Bitcoin and cryptocurrency trading in Singapore
Singapore was number one on the Q4 2021 crypto-friendly ranking with its progressive crypto economy, but a few things have changed – perhaps due to its success. The hugely important Monetary Authority of Singapore (MAS) marks the country’s throttling back on the cryptocurrency accelerator by issuing firm guidelines that its crypto service provider community should not be allowed to offer its services to the general population. This falls some way short of an official ban, but is more an attempt to curb the rise of interest in crypto amongst the population, and the risks involved which many people may be unprepared for -especially in view of recent price volatility.
Those service providers defined by the new measures, including banks, will fall under a wider definition of crypto services under the Payment Services Act, which takes in agencies providing custodial wallets and exchanges. Basically, advertising to encourage or promote crypto services is now seen as attracting consumers to trade without being aware of the risks.
The wide-ranging dampening of crypto promotions runs right across society, from public open areas and transport (outdoor media), to public websites, social media and broadcasting – which pretty much covers everything. Left alone is the ability of crypto service providers to promote their services only on their own websites.
Having taken these measures, Singapore is still a leading crypto country and, as elsewhere, its government shows enthusiasm for blockchain technology and the potential it offers, but attempts to dampen encouragement for the trading of Bitcoin among the general public. Price volatility and risks, they feel may not be properly understood overall by non-professional individuals, or at least not properly conveyed in advertising.
There may be more to come in the pipeline regarding crypto legislation. Whether this will be a more balanced approach to raise awareness and moderate rather than moves to inhibit crypto trading remains open but wither may be forthcoming. At the moment this move helps to take Singapore off the top spot in the Coincub Q1 2022 ranking.
In keeping with maintaining its competitive position, Singapore offers firm but clear legislative guidance with a low tax on crypto earnings combined with a progressive attitude within the financial sector and lots of retail uptake.
Law and crypto trading in Singapore
Legal - existing crypto legislationBitcoin and other cryptocurrencies are recognized and accepted by the Singaporean government as legitimate. There is a strict requirement to follow laws and regulations. The country has embraced the concept of crypto and the Monetary Authority of Singapore has, like Sweden, been looking into forming its own e-money. As a major business centre, Singapore is keen to adopt the latest innovations and thinking in this area.
Legal - forthcoming crypto legislationSingapore is actively assessing all aspects of crypto, such as trading services and blockchain technology.
Taxing cryptocurrencies in Singapore
Income Tax
Tax is a subject never far away from bitcoin and other digital currencies. Put simply, any crypto that you purchase is treated as property, but if you trade it on a regular basis your gains will be subject to tax (17%) The Inland Revenue Authority of Singapore (IRAS) is responsible for tax collection.
Tax relief
Basically, there is no capital gains tax in Singapore. So, if you’re buying bitcoin or another cryptocurrency and you make a gain in its value, there is no capital gains tax to pay when you sell. If you’re trading regularly – and that’s something you have to sort out – then the gains will be subject to tax.
Tax when moving residency
If you are a long-term resident of Singapore you are probably deemed a permanent resident for tax purposes. If you are not a permanent resident, and your holdings are outside of Singapore you’ll fall under the required tax laws of your adopted country.
Tax on mining
Mining is a hugely expensive exercise in time and money and way beyond the scope of most individuals. In Singapore, mining is not illegal but the costs of doing it might outweigh your potential gains. You’ll also have to pay income tax on your hard-earned mined coins at 17%.
Crypto financial services in Singapore
Most retirement and pension funds worldwide deem cryptocurrencies to be too volatile to become part of long-term retirement schemes. There is little certainty on this at present.
Singapore is highly advanced as a financial trading center, and crypto and digital currencies are widely understood right from the top down including the possible adoption of an e-currency.
Decentralized Finance is behind the rapid interest and growth of cryptocurrency and is underpinned by blockchain technology. The central bank, the Monetary Authority of Singapore, is looking at new financial sector regulations including stronger standards for cryptocurrency service providers and higher requirements for technology risk management in financial institutions.
Using crypto in Singapore
Singapore is a very progressive country in its acceptance of crypto and there is a growing number of bitcoin ATMs across the country. You can spend popular cryptocurrencies like bitcoin and ether in a number of outlets and retailers, as well as on gift cards.
The gains on your bitcoin will be subject to tax prior to gifting.
Crypto regulation in Singapore
Singapore is one of the leading players in regulating crypto and exchanges are firmly licensed and regulated by the country’s central bank, the Monetary Authority of Singapore. The combination of low tax on crypto and firm regulation makes Singapore an attractive place, but you’ll always need to check out what exchange suits your needs best and the levels of service, insurance, and protection they can offer individuals.
You have plenty of choices for choosing exchanges, both overseas and home-based ones. In all cases, you’ll have to verify your email address and identity. Local exchanges all have to comply with central bank guidelines and reporting obligations. You’ll possibly enjoy better customer support and protection with a locally based exchange whereas an established worldwide exchange may offer an increased range of features and services.
