China

Behind China's great crypto exodus to Singapore

Chinese crypto players are seeking a new home base. Singapore is hungry for crypto talent.

People hold a bitcoin balloon next to a phone with bitcoin chart

Singapore is expected to become a global DeFi center, thanks in part to China's crypto crackdown.

Image: Costfoto/Barcroft Media via Getty Images

Singapore is emerging as a global crypto stronghold as droves of Chinese blockchain investors, startups and crypto exchanges scramble to fly the coop following an intense regulatory crackdown at home.

In late September, China's powerful regulators delivered the heaviest blow to the country's once-sprawling crypto industry by criminalizing all crypto-related activities, from mining to transactions. Industry players have been winding down their operations in China and are on a quest for safe havens.

Many of the exiled and soon-to-be-exiled crypto exchanges, wallet apps, crypto market data publications, decentralized mining services and investors are eyeing Singapore. The Southeast Asian island city-state takes a more progressive approach toward crypto compared to China's heavy-handed stance. And Chinese crypto players' intentions to relocate to Singapore meshes with the city-state's ambition to cement itself as a global decentralized finance hub.

"Any firm with influence in the industry has already had a presence in Singapore," said Yan Suji, founder of Mask Network, which creates software that enables social media users to send cryptocurrency and interact with decentralized applications. "People in the industry either already have plans to relocate or have secured a visa so that they can leave whenever it's no longer safe to stay in China … there's no exception."

The Singaporean government is also actively recruiting Chinese crypto players. In late August, the Singapore nonprofit Business China — of which Singapore's former prime minister is a founding patron — hosted a closed-door conference aimed at improving the city-state's digital economy. Chinese crypto heavyweights, including Binance founder Zhao Chengpeng, imToken founder He Bin, and Bitmain and Matrixport founder Wu Jihan were among the attendees, per screenshots of the conference agenda that Protocol reviewed. Notably, Ethereum's co-founder Vitalik Buterin spoke at the event, as did a few senior Singaporean government officials.

Yan, one of the conference attendees, told Protocol that crypto entrepreneurs and investors in attendance rubbed elbows with dignitaries and their families while discussing the opportunities for Singapore's blockchain industry.

"To me, they were obviously winking at us, 'Welcome to Singapore,'" Yan said. "Of course, they would not say it out loud. But all Singaporean state-owned enterprises and investors came to hear us speak, and former government officials wined and dined with us … It's a very Chinese way of business-dealing. You just get it right away."

Beyond the implicit hospitality, Yan recalled some senior officials and business VIPs explicitly asking the attending Chinese crypto entrepreneurs: "Are you ready to fly the coop?"

Why Singapore?

The Southeast Asian city-state of fewer than 6 million inhabitants punches far above its weight; it is the fourth-largest financial center in the world. And its business environment, which emphasizes networks of favor-exchanging and mutually beneficial relationships developed outside formal settings, is similar enough to China's to allow its entrepreneurs to fit in seamlessly.

Hong Kong, another Asian financial hub, could have been an alternative destination for Chinese decentralized finance businesses. But the special administrative region of China has fallen out of favor with Chinese-speaking investors, Yan said, as civil unrest and the lack of confidence in the government runs deeper. "Hong Kong just feels different now," Yan said.

Publicly, the Singaporean government has been sending welcoming signals to crypto players big and small in China — not to mention globally. "We think the best approach is not to clamp down or ban these things," Ravi Menon, managing director of the Monetary Authority of Singapore, told Bloomberg in a recent interview, adding that the country is "interested in developing crypto technology, understanding blockchain, smart contracts and preparing ourselves for a Web 3.0 world."

Singapore's friendlier stance on crypto has attracted major Chinese crypto exchanges. By early August, about 170 companies had applied for a MAS digital payment token (DPT) license. Prominent Chinese exchanges including Binance and Okcoin were among the applicants, according to Cailianshe, a Chinese online securities publication.

The Chinese crypto exodus actually started before Beijing handed down the final blow to the country's crypto industry in late September. That's because China crypto entrepreneurs and investors had seen the crackdown coming months ahead.

"Since this May, many crypto companies from China have already established offices in Singapore. There is already a vibrant Chinese crypto community there, so it will be easy for those who move from China to Singapore to adapt quickly," Lily Z. King, COO of a Singapore-based crypto custody and asset management platform, wrote in a recent commentary for Forkast. "Singapore is the new base, and Southeast Asia is the new crypto playing field full of potential."

Yan, the Chinese crypto entrepreneur, told Protocol he set up an office in Singapore after the Business China conference at the encouragement of Singaporean dignitaries. He subsequently hired dozens of workers there.

"There's nothing promised by the Singaporean government," Yan said. "But there's something promising."

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