12th December, 2019|Russell Toop
Russell Toop, the founder and managing director of Cheshire Consultancy, lists Singapore's credentials in digital assets
With Goldman Sachs recently moving $4 billion out of Hong Kong due to unrest and Brexit focusing companies’ minds on geography, Singapore is well-placed to benefit from these volatile times.
Singapore is the gateway to Southeast Asia, the world’s third-largest economy with 600 million people across 10 countries, and sits at the hub of global trading network that positions the city-state at the crossroads between East and West.
Singapore’s central bank the Monetary Authority of Singapore (MAS) has in recent years helped establish Singapore’s global fin tech hub status through initiatives such as the annual Singapore Fintech Festival which took place over five days in November and is the largest of its kind, with over 60,000 participants from over 127 countries.
There were five key takeaways:
The focus remains on people
Blockchain & Tokenisation are still pivoting on the best use-case
AI industry applications are omnipresent
Sustainable finance is about real business not just greenwashing
Cybersecurity is on every regulator’s agenda (and so is Libra!)
Blockchain is currently facing increased scrutiny by regulators amid post-bubble market dynamics that should give blockchain greater clarity and a more solid footing.
In this climate, several projects and companies have shown flashes of great things to come. Some blockchain ventures are a safer bet than others simply due to their association with established, successful companies.
Yet regulatory clarity, increased awareness and adoption by market incumbents have helped the products mature which has, in turn, further increased their uptake.
The most popular advantage of security tokens, as indicated by respondents to Greenwich Associates, is the ability to trace transaction history which is key to many businesses.
With the introduction of digital assets, risks of transaction history fraud and operational errors are expected to be significantly reduced.
A survey by the World Economic Forum stated that: 10% of global GDP may be stored with blockchain technology by 2027 whereas currently it sits at about 0.025% of a global GDP of $80 trillion.
MAS was also one of the earliest central banks to adopt “regulatory sandboxes” for fintech companies. These allow firms with new ideas to test their products and services in a controlled environment before fully launching them.
And the efforts of MAS are bearing fruit as various new digital projects come to market.
Sygnum, the digital asset technology group based in Singapore and Switzerland, announced recently that it has successfully obtained a capital markets services (CMS) licence from the Monetary Authority of Singapore. The company also holds its banking and securities dealer licence from the Swiss Financial Market Supervisory Authority (FINMA). With the CMS licence, Sygnum can now conduct asset management activities in Singapore, and will focus primarily on digital asset investment strategies for institutional and private qualified investors.
Project Ubin is a collaborative project with the industry to explore the use of Blockchain and Distributed Ledger Technology (DLT) for clearing and settlement of payments and securities.
The project aims to help MAS and the industry better understand the technology and the potential benefits it may bring through practical experimentation. This is with the eventual goal of developing simpler to use and more efficient alternatives to today’s systems based on central bank issued digital tokens.
Project Ubin is a multi-year multi-phase project, with each phase aimed at solving the pressing challenges faced by the financial industry and the blockchain ecosystem. The project is now in its fifth phase, and has since published five project reports.
Tokenised SGD
Re-imagining RTGS
Delivering Vs Payment (DvP)
Cross-border Payment versus Payment (PvP)
Enabling Broad Ecosystem Collaboration
Hashstacs Singapore-based blockchain firm developed by the Securities Trading Asset Clearing and Settlement (STACS) Project can list digital representations of funds and debts on blockchain.
Earlier in the year Hashstacs’ live client Gibraltar Stock Exchange successfully deployed a GSX Digital Stock Exchange Prototype on STACS blockchain, and issued a demo bond on its basis. As a recognised stock exchange regulated in the European Economic Area (EEA), the new GSX listings would be cover a wide range of asset classes for issuers and investors.
The Singapore Exchange (SGX) has partnered with the Monetary Authority of Singapore to explore utilisation of blockchain for improving the speed and efficiency of the securities settlement process. The initiative is getting technical support from three established technology partners: Nasdaq, Deloitte, and blockchain start-up Anquan.
HSBC Singapore recently announced a partnership with SGX and state-owned Temasek for a blockchain trial for servicing fixed income securities. The project will focus on end-to-end digitalisation of the Asian bond markets. This joint evaluation is reviewing whether smart contracts and DLT can solve some of the long-standing challenges in the fixed income issuance ecosystem.
As the UK government looks to boost exports outside the EU due to Brexit and UK firms eye more keenly non-EU markets for growth, Singapore’s growing fintech sector is an attractive prospect.
Cheshire Consultancy, based in Singapore, helps financial market technology companies expand in the region by advising on business development strategies.
For an independent confidential discussion please contact: russell@cheshireconsultancy.com, Tel +65 91858781