Founded in 2013, Independent Reserve is one of Australia’s most established cryptocurrency exchanges. It embarked on its international expansion plans in late 2019, setting up operations in Singapore.
While most cryptocurrency exchanges in Singapore are operating under a license exemption, Independent Reserve is formally licensed under Payment Services Act. It‘s currently one of only three entities to hold a DPT (digital payment token) license from the Monetary Authority of Singapore (MAS).
The approval was granted after a rigorous 19-month examination by the MAS on the platform’s customer protection mechanisms, screening, and compliance structures.
As Singapore continues to expand its fintech capabilities, licensed exchanges might well define the rate of adoption of cryptocurrencies and blockchain technology in the country, especially with increasing regulatory scrutiny on the industry.
Our journalist spoke to Raks Sondhi, Managing Director, who discussed the process of working with MAS, crypto investing, and Singapore’s place as a regional cryptocurrency hub.
Congratulations on obtaining the DPT license! Take us through the process of working with the MAS.
Because it’s a new framework and MAS has not looked at digital assets before, it was more of a process of us working together with the regulators. Our responses were probably a lot more detailed than the other firms because we were also educating them about how it fits into our business model and not just “yes” and “no” answers. It was just being fully transparent and giving them everything they need and more.
It’s been exciting, but don’t get me wrong – there’s been some very long days and a lot of effort put into this. I’m glad we were one of those that actually came through. There were 170 applications of which 22 percent have dropped out or been withdrawn. And on the DPT side, only three firms have been granted the license. We’re actually the first exchange under the major payments institution license so we’re quite happy with that!
What’s the incentive for stock investors to jump aboard the crypto bandwagon considering there are so many opportunities in the equity market right now?
Over the last couple of years, crypto exchanges have made investing in digital assets just as simple as investing in traditional markets. It’s deemed as a high return investment but there are obviously risks associated especially in volatile markets.
But with the ease of access to exchanges like Independent Reserve, you can invest and withdraw in minutes. There’s also investment products out there so if you’re unsure what you should be investing in terms of crypto, there are funds that are similar to equity funds where your allocation can be managed for you.
There are also yield products that can offer you multiples of what the bank may be paying you an interest or dividends in the stock that you’re holding. So hopefully you’ll have digital assets that are appreciating in value but you’re also earning the yields from your holdings on that.
What else is necessary for widespread adoption of cryptocurrencies?
Education is absolutely key. If you look at the IRCI (Independent Reserve Cryptocurrency Index) survey that we conducted this year, Singapore had a score of 63, higher than Sydney, Australia at 48. That attests to the adoption rate and awareness of crypto in Singapore.
We’re definitely in favour of doing things like webinars and sessions to educate people. Not in terms of what crypto they should be buying, but actually what the investment thesis is in terms of how to look at cryptocurrencies and make sure they actually know about the risks as well.
Can you see Singapore becoming a regional hub for blockchain and crypto?
Singapore is already the hub. We’re not talking about the future. There are a lot of things that are influencing people’s decisions, one of which is the regulator – the MAS. They have just embraced crypto firms in the sense that they know this is already going to happen. So they’re doing the best they can in terms of putting the customer protections in place for the retails and institutions that may want to deal with these organisations.
The general government support has been phenomenal as well. There are grants, awards, and a sandbox environment that they’ve been promoting for fintech firms to deploy their technologies in an environment where they can integrate with the traditional finance base to bridge that gap.
The other thing is the talent pool here. Singapore’s NUS ranked #1 in blockchain globally in a survey done by Coindesk. There’s also the investment that firms are putting into teaching some of these courses at NUS and other universities as well.
The whole ecosystem here is really attracting firms to either branch out to Singapore or actually relocate to Singapore. We’re also seeing some Singaporean fintech firms that are opening additional offices in places like the US and Europe. It’s a great success story.
Hong Kong has always been known as the direct competitor to Singapore for finance, but what about the digital assets space?
Was a direct competitor! Hong Kong was actually moving very quickly In the sense that they announced their framework for crypto exchanges and there were a few exchanges that got a license. They seemed to be granting licenses a lot quicker than what MAS has been doing but then they did a backtrack. That whole retail market that they were targeting had a carrot dangled in front of them and they actually had a couple of bites. That’s now being taken away.
If you’re an investor in Hong Kong looking to get into crypto, I think you need to have about a million dollars worth of wealth in order to qualify to invest in crypto. It’s actually very interesting to see the outflow of some of those firms coming into Singapore now. China started deregulating crypto back in 2017 and most recently it’s been completely banned.
There’s obviously been an outflux of organisations, whether they’re crypto exchanges or blockchain firms. So if you want to be in Asia and have exposure to the Asian market, the safest home for you to have actually is in Singapore.