Singapore, the island nation, just got its first Bitcoin ATM in March 2020, but talk is getting more definite about whether it needs another currency whose main appeal is its anonymity?
Bitcoin is a virtual currency that’s garnering much attention globally as the future of money. It’s fun, sexy, and easy to trade, but it has its own inherent risks. That is why countries like China and Thailand are wary of this cryptocurrency and have outlawed it. India and Indonesia may soon be following China. But, Singapore has gone off the tangent and has chosen not to regulate it, but is just warning individuals and businesses that they will trade with bitcoin at their own risk.
It’s not surprising that Singapore has embraced this digital currency as it’s basically a business-friendly country. It’s deemed to be the world’s easiest place in which to do business, according to the World Bank’s annual report released in October 2019. Singapore offers the most business-friendly regulatory environment for entrepreneurs of all hues. But, bitcoin’s inherent risks may damage Singapore’s hard-earned financial reputation.
Voices are already growing louder that are calling Singapore out as a money-laundering hub and tax haven. The voices warn that bitcoin will increase the risks as this digital currency’s biggest appeal is the anonymity it offers. This means it is easily used for funding of illegal activities and money laundering.
The Singapore government did a risk assessment study, and this has proven that the island nation is susceptible to terrorist financing and money laundering. The study also showed that some sectors needed stronger controls. These include banks, casinos, money changers, and lenders. It noted that banks face higher risks because of large customer volumes and also due to the international nature of the financial
Bitcoin is an international currency, as we know. And because it can’t be traced back to the customer, many buyers and sellers doing illegal activities like the sale of contraband goods and drugs, are attracted to it.
Bitcoin: Not a stable Payment Option
Another reason for merchants in Singapore to be wary of bitcoin is because it’s not a very viable payment option because of the fluctuation in its value. There’s always the possibility of losing a lot of money if this currency’s value drops exponentially.
The viability of bitcoin is thus a big question mark. In a country like Singapore, consumers are used to cash, credit and debit cards, as well as wallets as payment options and they surely don’t need bitcoin.
This leads us to concur with the statement that with all the associated risks, there is little reason to transact in bitcoin over traditional money in Singapore.
Cryptocurrencies are gaining massive traction in Asia, and as per statistics, 40% of the top 50 crypto exchanges are based in the Asia Pacific region. Singapore is known as one of Asia’s greatest startup capitals, and we hope it will maintain its position. But, Singapore can’t stem the tide of digital currencies. It has to take into account that Hong Kong is fast becoming the capital of cryptocurrencies in Asia. Singapore can’t let this happen. It has to do everything to grab a portion of the digital currency market share; otherwise, it will lag behind as a financial hub.
Having said this, a better option would be for the value of the bitcoin to stabilize. Bitcoin will become safer if the governments start recognizing it as a legal currency. This way, customers will be able to seek recourse in the case of fraud. But, before this happens, things will not be very good for bitcoins. And this is a crying shame. Bitcoin deserves better.