How Does The Singapore Government React To Bitcoin?
It is said that Bitcoin does not have legal tender status in Singapore, and there are no laws in place to regulate its use as a currency. However, it also warned that people who use Bitcoin face significant risks:
There could be potential for participants in such schemes to get ripped off as cryptocurrency users typically do not have legal protection if the products and services, they paid for don’t deliver. At least, not yet.
The MAS also said that money laundering and terrorism financing could be an issue because transactions occur anonymously and outside the banking system. Transactions using such currencies may therefore invite unnecessary attention from law enforcement agencies.
The MAS advised: We do not see any case for investors to use bitcoin, and we would discourage the public from investing in bitcoins. Even though there is no clear indication that bitcoin can be used to conduct illicit activities such as money laundering and terrorism financing, bitcoins are vulnerable to being misused for these purposes.
It cited a recent example of suspected Singaporean receiving funds from an online platform as payment for bitcoins before using the virtual currency to buy stolen credit card data he intended to sell.
The MAS also said that Bitcoin has ” no recourse or protection. ” It cannot be quickly recovered if lost or hacked due to a technical fault or cyberattack. Moreover, there will be no way to trace the culprit and recover the funds in fraud or theft.
However, if that were not enough, look at how it is treated in Singapore’s laws:
The law governing virtual currencies such as Bitcoins is found in the Securities and Futures Act (SFA). Under section 2 of the SFA, digital tokens involved in offerings made through crowdfunding or an ICO are treated as securities. Digital tokens that are used to pay for goods or services or as tools for facilitating financial contracts in a decentralized manner may be considered virtual currencies.
The MAS has also issued two sets of guidelines for virtual currency activities. The first is on offering virtual currency products and services to investors here. The second is on crowdfunding platforms offering or facilitating token sales under the financial market laws.
So there you have it. Bitcoins are not legal tender in Singapore. So, anybody caught using them, especially for selling drugs or weapons, could be arrested and charged with drug trafficking or trading in arms.
So far, the MAS has yet to issue any exchange licenses, so even if you want to trade bitcoins here, you cannot do so officially. Under the current laws, if you invest $10,000 in bitcoins and the price falls to $5,000 within a year, you will be taxed on your profits.
That is because bitcoins are usually treated as capital assets. If the price of bitcoins were to rise to $20,000 next year and you sell them to buy gold bars worth $25,000, your $5,000 today profit will be subject to capital gains tax (CGT).
How do you know if your gains made from bitcoins are taxable? The MAS said that ” If an amount is received that represents the proceeds of disposal of virtual currency, it will be considered income.”
Bitcoins are not legal tender in Singapore, so you cannot use them to buy things here. If you buy bitcoins, it will probably be taxed as a capital gain. Bitcoin scams are rife, so do not invest any money into bitcoins or related investments unless you are well-versed in cryptocurrencies. They are glorified gambling schemes.
If you want a safer alternative, Singapore has a growing number of gold traders who allow you to purchase precious metals such as gold bars and silver coins online. These are usually cheaper than buying from overseas exchanges because they do not have many overheads. Moreover, if you still think that physical possession of the gold makes it more secure, you can even store it in a safe house.
Singapore has many unregulated forex brokers who simply want to make money trading cryptocurrencies. They usually offer high returns but are often not suitable for beginners because online scams are rife in the industry.