- Singapore suffered losses all year.
- How FTX contributed to the losses
- Reputational damage is done to the city.
- How Singapore plans to move on from this.
Singapore was among the countries that announced its interest in harnessing blockchain technology. It once had the potential to become a global center for cryptocurrency, especially with its encouraging business environment. It has the potential to draw the attention of digital asset companies and a steady flow of investors.
Singapore had an investment increase of tenfold compared to its previous year, which amounted to $1.48bn, making up almost half of the Asia Pacific total.
2022, however, was a very different reality for Singapore. The crypto assets and companies, many with links to it all, imploded, which caused chaos globally and sparked a chain of losses, the first of the many disasters being Terra Luna collapsing, which dragged its sister token TerraUSD, which had been stable down the same path with it. A few months after that disaster, a Singapore-based crypto hedge fund, Three Arrows, also collapsed after it filed for bankruptcy, and with it went down Voyager Digital. In August, Hodlnaut joined the list of crypto disaster cases.
November was the most disastrous for crypto as US crypto exchange FTX collapsed and filed for bankruptcy, taking other crypto companies exposed to it. The founder of SBF is now called one of the biggest financial frauds in the history of the United States.
The collapse of FTX hit Singapore particularly very hard as the city’s state investment fund Temasek had investments in the crypto exchange, with them pumping in $275m over some months, while Temasek has said they will conduct an internal review into their assets, the fund for them is worth more than $295bn, so the one invested into FTX was just a tiny fraction of their wealth portfolio, the city’s deputy prime minister however admitted that the loss was responsible for causing reputational damage.
Many people had trusted the city and its investments, they expected more, and because of their exposure to FTX, people were caught in the fire. People called for more regulations to be made regarding the crypto industry to avoid any other future occurrences.
However, the collapse of FTX can’t be the last one. Every amount of regulations created can only partially save those interested in investing from the fallouts. If any, the government can only try its best to safeguard, but crypto has always been a volatile commodity, and the government can only do so much.
Singapore still has a vision of being a hub for the web 3 space. Still, the government will tighten regulations and move forward with care to avoid losing even more investments and investors in any fallouts or exposures. However, the problem with Singapore’s interest in crypto is their wish to be a web 3 hub without allowing crypto retail trading or owning self-hosted wallets to be made available. It might be next to impossible for the two requirements to work. Still, the city’s reasons for it are on the right path, as they are trying to reduce the exposure to the collapse of these crypto platforms, especially after Terra and its sister company collapsed. FTX filing for bankruptcy and having a hand in losing millions of dollars will increase their apprehension for the crypto market and all things that may cause an even more significant financial loss or a harder hit to the city’s reputation.
Conclusion
FTX has had a hand in driving several companies and countries from the crypto space, either by exposure to the now-bankrupt company or by panicking, as most investors are pulling out to cut their losses with countries tightening their regulations on cryptocurrencies.
Other companies laid off workers to cut costs and keep their companies afloat for longer, especially with the current crypto winter. Singapore may not shun the crypto industry, given their interest in making the city a hotspot for web 3. They cannot achieve that by completely taking themselves out of the crypto market. Still, they will move more carefully to avoid any more considerable damages to their investments and their reputation, which is currently being questioned by the investors who had trusted them to invest wisely and have now lost their fortune from the many misfortunes that have happened this year which is in massive contrast to the success it had just last year.
