For a moment it seemed that every centralised exchange or financial company, from Bybit to Crypto.com to Three Arrows Capital, were moving to Dubai from Singapore.
There were a lot of speculations that this was owing to the regulatory pressure in Singapore since the government told crypto players in the country to stop advertising their services to retail investors, along with other regulations.
Many crypto companies have also struggled to obtain a digital payment token service license to convert cryptocurrencies into fiat and vice versa. So far only four such licenses for “major payment institution”) have been issued, amid a very long queue of applicants, and amongst all the exchanges applying only local CoinHako got it:
Meanwhile in Dubai, the government even announced its new “Virtual Assets Law”, establishing a new regulatory authority and licensing to operate in Dubai, creating a sense of regulatory friendliness.
However, there’s more to the picture than just strict rules. So why are crypto companies setting up an office in Dubai? Are these moves sound? Some of our thoughts:
- Singapore has neither been very friendly nor hostile towards crypto. The government stance seems to be always clear: fostering financial innovation while protecting retail investors. It has not shifted its stance.
- In May, Deputy Prime Minister Heng Swee Keat stated the stance clearly in a speech.
- Not being able to advertise to retail customers is not a reason for crypto companies to move – before the mass advertising of Crypto.com late last year, it was understood that many exchanges simply could not serve customers in Singapore.
- However, some real pain faced by many crypto-related companies in Singapore was the KYC by banks. Many have faced challenges opening bank accounts or had their bank accounts closed with no reason given.
- Besides, Singapore’s participation in the sanctions against Russia spooked some insecure crypto tycoons.
- In Singapore’s sanctions statement, it was specifically mentioned “Digital payment token service providers are specifically prohibited from facilitating transactions that could help to circumvent these financial measures. These measures apply to all financial institutions in Singapore, including banks, finance companies, insurers, capital markets intermediaries, securities exchanges and payment service providers.”
- The perceived regulatory friendliness in Dubai had companies weighing the option. At least it was worth diversifying.
- There is also a cluster effect – when some companies started moving, others would explore the same option as well. Dubai’s clause that a company needs to set up their headquarters in the country to obtain a commercial license could be an added catalyst for the ‘move’. The fine prints remain unclear.
- Many crypto bosses would probably need bodyguards in Dubai, as opposed to being able to just go around in a car (or a Grab) in Singapore.