It’s been revealed that Singapore’s financial regulator is going to help local cryptocurrency firms set up traditional bank accounts, in order to boost the country’s fintech economy. I recently reported that Canadian banks aren’t quite as on board with cryptocurrency, so what is the difference? In Singapore, the government wants to try to bring the banks together to come to some kind of understanding. Maybe that will happen one day in Canada, but right now, that’s not an option. Is this a good thing? The short answer is yes, but I think what this does is put a lot of regulations and stipulations around what can be done within the country. Which I think is a really good thing.
As much as we think we know about cryptocurrency, it’s still a bit unknown. I’ve said this before and I’ll continue saying it – regular consumers just don’t have the background or understanding to know what it is or what to do with it. It’s not like a stock, for example, where most people understand what it means when Apple is trading at $216.36. Yes – cryptocurrency also has a value, but one Bitcoin is worth $6,193.82. What does that mean? Cashing in a stock, again, has a relatively easy process. Can you cash in your Bitcoin just as easy? When Apple goes public, they identify so many shares for the company. Meaning, you can only buy so many shares. With cryptocurrency, however, you don’t necessarily buy it. Instead, you mine it using your computer’s hardware.
Which makes it kind of like finding buried treasure. Or having a gold nugget. What does this mean for you? Yes, there’s value, but there isn’t really a market to sell your gold nugget. You can’t take it to Best Buy and purchase a TV.
Getting back to Singapore, though, one of the stipulations is that this deal is only available for Singaporean businesses. Meaning, if you want to go set up your business in Singapore, you’re not going to be eligible for this deal. In general, crypto-based businesses in Singapore have been struggling to grow as banks continue to deny or close their accounts. (Kind of like the Canadian example) What’s unknown is how the government will mediate this relationship. And while I still think this is a good thing, I do wonder what kind of outcome this will have? My guess, as I’ve already indicated is that this will be highly regulated.
This isn’t the first government to attempt to bridge this kind of gap. Last month, the Swiss government issued guidelines to their 250-plus banks to help nurture relationships with blockchain startups. In that case, many blockchain companies were leaving the country after having bank accounts revoked or closed. What I do like is the fact that these kinds of partnerships are being established. What is interesting is the way this is playing out there. Blockchain was created to decrease society’s reliance on banks. And even though, it’s been 10 years since it was introduced, we’re still relying on banks. In fact, blockchain is now relying on banks.
These two groups need to sort their stuff out because the truth is, we need both of them right now. Whether that’s the case in the future, I can’t predict, but the way we spend money is certainly changing.