The Grand Crypto Party – You’re Invited, But Should You Go?

While Singaporeans have taken their baby steps, cryptocurrency is not yet legal tender here, and still a very volatile asset class.

By Quek Quan Bao, Senior Group Director of Trust Advisors Group, SG Alliance Pte Ltd.

They say, put your money where your mouth is, and some people these days are having mouthfuls of cryptocurrency for breakfast, lunch, and dinner. Why the rising appetite for crypto? Let me first explain about this new investment conundrum that has gone from two-bit curiosity to virtually impossible to ignore.

What is cryptocurrency?

Simply put, it is virtual money, the currency that operates on the decentralised blockchain platform. Its value is not determined in traditional ways such as by government control or by the price of a commodity like gold. Instead, the value of cryptocurrency is determined by open transactions in the digital sphere amongst the cryptocurrency community. It cannot be counterfeited or double-spent, and since it is not issued by any central bank, it is free of governmental interference. However, that very feature robs crypto of any sovereign guarantee, making it a high-risk asset. Trading and exchange-rate volatility compound this risk.

On the positives, crypto’s virtual nature — immunity to inflation, total transparency, and high divisibility — make it a promising candidate for use as legal tender. As recently as in June 2021, El Salvador became the first country in the world to recognise Bitcoin as legal tender1. Companies such as Microsoft and PayPal have been accepting Bitcoin as a form of payment since 20142.

Is Cryptocurrency here to stay?

In early August 2021, the Monetary Authority of Singapore (MAS) granted an “in-principle approval”3 under the Payment Services Act to an Australian digital payment token service provider, essentially paving the way for the licensing of the first operator of its kind in Singapore. The central bank has indicated that more licences will be granted.

As global financial regulators continue to scrutinise cryptocurrency, Singapore’s friendly regulatory environment is attracting related companies from around the world. Exciting times are definitely ahead for cryptocurrency. But to take it seriously as a key asset class in your portfolio, I’m still giving it a hard pass.

Let me explain – crypto is much like arcade tokens. It stands for money, but it is not actual money. Since it is not backed by physical commodities such as precious metals, it’s all in thin air. Let’s say, you exchanged $1,000 for 1,000 tokens of an arcade owner. To your poor luck, that operator vanishes the next day, leaving you high and dry with their worthless 1,000 tokens. Likewise, with cryptocurrency. There is an intrinsic risk of it turning into junk in the blink of an eye.

Your crypto investment could be vulnerable if regulators get serious with their crackdown. In recent news4, the Monetary Authority of Singapore has stopped from carrying on its unlicensed payment services, and put Binance on the MAS Investor Alert List5.

In general, cryptocurrency remains a volatile asset to hold.

Will I recommend crypto?

To succeed at the crypto tradecraft, one needs deep subject knowledge, skills, and a lot of luck. I feel there are many other ways to grow wealth through informed choices.

My advice to everybody that has honest money to invest – play safe, be mainstream. Keep an eye on cryptocurrency. But stay faithful to good old-fashioned stocks, unit trusts, ETFs, bonds, and the like. Although returns on them are not guaranteed, the instruments are regulated and backed by physical assets or entities. For example, government bonds are backed by the government.

And if you are looking for guaranteed returns, consider annuity plans or endowment plans backed by the Singapore Deposit Insurance Corporation(SDIC).

Get in touch with me if you would like to continue the conversation about cryptocurrency and other opportunities in the investment landscape in Singapore.

1 Source: Forbes,
2 Source: GoBankingRates,
3 Source: Straits Times,
4 Source: Business Times,
5 Source: Monetory Authority of Singapore,

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