As entrepreneurs and businesses from less crypto-friendly countries search for a place to hold initial coin offerings, Singapore could stand to gain, Alain Esseiva writes in an essay for finews.asia.

2017 was a significant year for cryptocurrencies, with continued growth in their value including record pricing for bitcoin, the world’s first futures market, and a record number of initial coin offerings (ICOs).

However, the adoption and embrace of cryptocurrencies has been uneven around the world, with some countries keeping them at arms length, others dipping their toe in the water and others welcoming them with open arms.

What is clear, though, is that cryptocurrencies are here to stay, and if Singapore is to continue its position as a financial hub in the future, it needs to develop smart regulations surrounding Blockchain technology. Luckily, the regional aversion to crypto could help.

«A new class of crypto affluents is emerging»

Despite the hype around crypto, some countries have implemented all out bans. Last year South Korea decided to ban ICOs entirely due to concerns around scams, following China’s central bank, which temporarily froze ICOs, declaring some of them financial scams and pyramid schemes.

These bans among others have forced many crypto businesses to look elsewhere to raise their ICOs. Additionally, a new class of «crypto affluents» is emerging, individuals who are rich, able to purchase a variety of luxury products yet keep their wealth in cryptocurrencies instead of traditional banks.

«Singapore still has to work to position itself as a centre for cryptocurrencies»

These businesses and individuals, especially from South Korea and China, are beginning to look to Singapore as a destination to either hold ICOs, or make their crypto wealth work. Yet while it has come a long way, Singapore still has some work to do to position itself as a centre for cryptocurrencies. On the one hand, the City State is open to crypto with the Monetary Authority of Singapore (MAS) laying out guidelines that seek to regulate ICOs.

Yet it has also expressed concern and caution, warning the public and urging them to understand the significant risks of cryptocurrencies, and urging extreme caution.

Singapore should start to develop more comprehensive regulations that cover this area if it is to continue its growth, and attract more crypto-business and wealth.

One European country could provide a suitable benchmark for Singapore. Thanks to political stability and a friendly and open regulatory environment, Switzerland has emerged as the world’s leading crypto hub, developing its own «Crypto Valley» ecosystem (specifically, the small canton of Zug).

«Switzerland has shut down allegedly fraudulent currencies»

Home to some of the most well known crypto currency start-ups, including Ethereum Foundation, Xapo, and Bancor, four of the 15 largest ICOs that took place last year were hosted in Switzerland.

That is not to say Switzerland has become an unregulated, «free-for-all» environment where any crypto business – legitimate or illegitimate – can venture. The Swiss Financial Market Supervisory Authority (Finma) works hard to distinguish those firms that are innovative and deserving of attention, to those that are fraudulent.

It has shut down allegedly fraudulent currencies (Quid Pro Quo Association is one example), and has issued guidelines and a code of conduct surrounding ICOs.

Singapore is a global player in ICOs, raising $184 million in ICOs from January to October last year, behind the U.S. ($580 million) and far ahead of regional arch-rival Hong Kong ($21 million).

Yet while there is excitement and growth around ICOs, they are still very unregulated, with many unsure as to what exactly the token represents, and this has put a hold on growth as investors are wary of potential fraud and losses. There are also major issues surrounding anti-money laundering and know-your-client legislation.

«The Lion City could gain from regional aversion»

And this is where, with intelligent regulations and guidelines, Singapore can start pulling ahead of its peers and position itself as a true crypto hub that could potentially rival Switzerland.

Importantly, by taking a forward-thinking stance, Singapore could gain from regional aversion to crypto, attracting legitimate crypto-entrepreneurs and businesses from less-welcoming countries to the City State, resulting in a thriving market of technologists and investors driving what could be the future of finance.

Alain Esseiva is the Singapore based CEO Alpadis Group, an international fiduciary services provider with a presence in Hong Kong, Singapore and Switzerland.