01 Web3 is leaving Singapore
Web3 refers to the next generation internet based on blockchain technology, which enables decentralized, autonomous, secure, and transparent network services and applications. The development of Web3 has attracted attention from countries around the world, especially in the fintech field. Web3 can create new or more efficient products and services, such as cross-border payments, programmable currency, digital asset trading, and tokenization.
Singapore has long been considered as one of the international centers for Web3, with a favorable policy environment, ample funding support, and abundant talent resources. However, in recent years, Singapore has faced competition and challenges from other countries and regions, leading some Web3 companies and investors to consider leaving Singapore in search of more favorable development opportunities.
02 Big players are withdrawing
Zilliqa is a blockchain-based smart contract platform that was founded in Singapore in 2017, but relocated its headquarters to London in 2021.
Kyber Network is a decentralized exchange protocol that was founded in Singapore in 2018, but relocated its headquarters to Israel in 2020.
Crypto.com is a platform that provides cryptocurrency trading, payment, lending, and other services. It was founded in Singapore in 2016, but relocated its headquarters to Hong Kong in 2018.
Interconnections is a blockchain-based data exchange and collaboration platform that was founded in Singapore in 2020, but relocated its headquarters to Australia in 2021.
There are many more examples like these… Why are many well-known Web3 companies withdrawing?
03 Policy changes
In January 2020, Singapore implemented the Payment Services Act, which introduced a licensing regime for Digital Payment Token Services (DPTS) and made Singapore the first country to comprehensively regulate cryptocurrency exchanges. This measure was seen as a support and encouragement to the Web3 industry, attracting many domestic and foreign companies and investors to enter the Singapore market.
However, in October 2022, the Monetary Authority of Singapore (MAS) issued a consultation paper on regulatory measures for DPTS, proposing a series of recommendations aimed at protecting consumer interests and mitigating risks. These recommendations include restricting retail customers from using leverage or credit for cryptocurrency trading, regulating the advertising of digital tokens, and requiring more information disclosure from DPTS providers. These measures are seen as tightening and suppressing the Web3 industry, potentially increasing operational costs and compliance risks for companies, and decreasing market vibrancy and innovation.
Meanwhile, other countries and regions are also actively promoting the formulation and reform of Web3-related regulations in order to compete for leadership in the Web3 field. For example, Hong Kong will implement a new virtual asset licensing regime in June 2023, allowing licensed virtual asset trading platforms to provide services to retail investors and opening up derivatives trading. Hong Kong also provides a transitional arrangement to allow companies already operating in Hong Kong to apply for licenses. These measures are seen as support and encouragement to the Web3 industry, attracting many domestic and foreign companies and investors to enter the Hong Kong market.
04 Fund Outflows
Singapore has abundant financial resources in the Web3 field, including government funds, venture capital firms, private equity funds, family offices, etc. These sources of funding provide stable and diversified financing channels for Web3 companies, promoting the development and innovation of the Web3 industry.
However, in the second half of 2022, as the global economic situation becomes more uncertain and the volatility of the cryptocurrency market intensifies, some funds have started to withdraw or reduce their investments from the Web3 sector and turn to more stable and conservative areas. This has led to increased difficulty in financing for Web3 companies and a decline in the valuations of some companies.
At the same time, other countries and regions are actively attracting capital inflows in the Web3 field, offering favorable tax benefits, subsidy policies, legal protections, etc. For example, Switzerland passed the “Blockchain Act” in 2021, providing a clear and friendly legal framework for Web3 companies, including definitions, issuance, trading, and custody of digital assets. Switzerland also has the world’s largest cryptocurrency banks, Sygnum and SEBA, which provide professional and convenient financial services for Web3 companies. These measures are considered as support and encouragement for the Web3 industry, attracting many domestic and foreign companies and investors to enter the Swiss market.
Singapore has excellent talent resources in the Web3 field, including technical developers, entrepreneurs, managers, advisors, etc. These talents come from Singapore and various parts of the world, forming a diverse and international Web3 community. Singapore also has high-level educational and research institutions, providing continuous talent cultivation and knowledge innovation for the Web3 field.
However, in the second half of 2022, with Singapore’s tightening policies on foreign population and increasing demand for Web3 talents in other countries and regions, some Web3 talents have started to leave Singapore in search of places with better development prospects and quality of life. This has led to talent outflows in the Web3 field and team downsizing or dissolution for some companies.
At the same time, other countries and regions are also actively attracting talent inflows in the Web3 field, offering favorable visa policies, job opportunities, living environments, etc. For example, Estonia launched the Digital Nomad Visa in 2020, allowing remote workers to stay in Estonia for up to one year and enjoy Estonia’s digital services and social welfare. Estonia also has the largest blockchain community in Europe, the Estonian Blockchain Association, which provides a platform for communication and cooperation for Web3 talents. These measures are considered as support and encouragement for the Web3 industry, attracting many domestic and foreign talents to enter the Estonian market.
05. Cost of Living
Another factor that affects the cost of living in Singapore is the cost of living expenses, including food, housing, transportation, education, entertainment, and more. According to a report by Wise, a single person needs an average monthly living expense of about S$3,300 (about HK$19,000), while a family of three, including two adults and one child, needs about S$4,800 (about HK$28,000), not including the cost of education for the child. These numbers may vary depending on individual lifestyle habits and choices, but overall, the cost of living in Singapore is relatively high.
Due to the high cost of living in Singapore, some Web3 companies and investors are considering leaving Singapore to seek more favorable development opportunities. Surrounding Southeast Asian countries such as Malaysia, Thailand, Indonesia, etc., offer advantages such as lower living expenses, more flexible regulatory systems, and more talent resources, attracting many Web3 practitioners to move to these countries. As a result, Singapore may lose some of its advantages and influence in the Web3 field.
In conclusion, Singapore faces challenges and competition in the Web3 field from policy, funding, talent, cost of living, and other aspects, leading some Web3 companies and investors to consider leaving Singapore. This may affect Singapore’s status and influence in the Web3 field.