Improving the Road Ahead: The Builders’ Wishlist
For this report, we conducted both quantitative and qualitative surveys among leading Web3 companies to identify their primary concerns regarding operations within Singapore.
The aim was to gather insights on how the city-state could enhance its environment to further stimulate innovation and development, thereby making Singapore an even more appealing place for Web3 businesses to thrive.
This survey was conducted within a period of 70 days, with 53 survey respondents by the completion of the report, and featured a mix of quantitative benchmarks and qualitative feedback.
Each survey was conducted as a 20 to 25 minute video interview. Where respondents needed more time to obtain data, the questions were sent to the respondent after the interview via email. Primary surveys have been completed by the 25th of October.
Regulatory Clarity
While Singapore has made significant progress in defining regulations for digital assets and Web3 — such as introducing the Stablecoin Regulatory Framework in August 2023 and implementing user protection requirements for Digital Payment Token (DPT) service providers in April 2023 — Web3 companies believe there is still more to be done. Despite these advancements, businesses continue to call for greater clarity to support compliance and foster innovation locally.
Definition on Digital Assets
Web3 companies in Singapore have expressed growing frustration over the lack of clear definitions surrounding digital assets, particularly stablecoins. This issue is further exacerbated by the fact that leading institutions like Circle, the issuer of USDC, hold the MPI licence despite no formal regulatory definition of stablecoins. This regulatory ambiguity is especially problematic for businesses whose core operations rely heavily on stablecoins, as it complicates their ability to maintain legal compliance and operate securely within the market.
There may be calls for companies to “simply apply for an MPI or DPT licence” as a straightforward solution for compliance; this approach is neither simple nor quick for many Web3 companies. Web3 companies need a clear written definition of digital assets so that they can continue to innovate rapidly while staying compliant.
The absence of such clarity creates a persistent risk of inadvertently violating the law, despite best efforts to remain compliant.As outlined in the following section, the complexities of the regulatory landscape make this decision far more nuanced, involving significant compliance costs, operational challenges, and uncertainty surrounding specific digital asset classifications.
High Cost of Compliance
Applying for the DPT licence in order to be able to legally offer services related to digital payment tokens, is generally considered to be a resource-intensive and expensive endeavour for Web3 companies.
To circumvent these costs, Web3 companies are able to receive DPT exemptions under certain conditions like the Public Interest Exemption or having Pre-existing Operations. However, there are certain contradictions of the DPT exemption with that of the increased scope of the PSA. Specifically, under the PSA, authorizing a transaction could subject an individual or entity to regulatory requirements, despite the fact that authorizing does not equate to holding or managing the funds (custody). This could be seen as an overreach because authorization does not involve handling the digital assets, which is where the greater regulatory risk typically lies (i.e., risk of loss or theft). This leads to regulatory obligations that are disproportionately cumbersome to stay compliant, even with having received DPT exemptions.
To navigate scenarios like this, even with a DPT exemption, businesses might have to incur added costs for employing staff to oversee these issues. A Chief Compliance Officer generally commands a wage of SGD $21K a month, a cost or wage that is out of reach for most Web3 businesses.
Limited Access to Services
These limitations pose significant barriers for Web3 companies, particularly those in the early stages of development, as they rely on these services to ensure operational stability and regulatory compliance.
The complex and evolving nature of Web3 regulations makes it difficult for service providers to offer clear guidance, leaving many businesses without the essential support they need.
Additionally, the perceived risk associated with crypto and Web3 activities leads many service providers to shy away from engaging with these companies, further exacerbating the problem.
This creates a cycle where businesses are unable to access the necessary services to meet regulatory standards, compounding the challenges they face in operating within the Web3 ecosystem. As a result, there is a growing demand for more streamlined, Web3-specific regulatory frameworks that would enable easier access to both banking and non-banking services critical to business growth.
A Call for Collaborative Environment
Perceived Lack of Government Support
Our surveys also indicated a lack of familiarity or dissatisfaction with grants and other government support for Web3 companies.
While outlined in sections 4.2.2 and 4.3.2 are grants like the EDG, GRT are available and have been used by Web3 companies, local Web3 companies feel that sector-specific opportunities are few and far between.
Survey participants further compared the aforementioned programmes with that of the Cyberport in Hong Kong as a reference point on how Singapore can look to help Web3 companies.
“(We) need to know what resources are available and there is a lack of startup support for Web3.”
“Hard to get support from the government"
“When you're a small start-up, it's hard to keep track of all of these (programmes)“
“The government lacks support, especially for small players.”
Cyberport is a government-backed digital technology hub in Hong Kong designed to support startups and drive innovation.
Through its Cyberport Incubation Programme, startups can receive financial support of up to HK$500,000 (approximately USD $64,000) over a 24-month period, as well as access to mentorship, networking, and co-working spaces.
Over 150 Web3 firms have joined Cyberport in 2023, benefiting from additional government funding, totalling ~USD$7M, to promote startup development.
By offering financial support and a collaborative environment, Cyberport has made Hong Kong an attractive destination for Web3 startups to set up base for their operations.
Regulatory Collaboration
Survey participants emphasised the importance of establishing a forum where Web3 companies can directly engage with policymakers.
This initiative is crucial for policymakers to stay agile with the rapid innovation in the Web3 ecosystem. Despite innovation stemming from startups, their unique challenges and needs are often overlooked by policymakers.
Currently, forums and discussions tend to focus on larger, more established players, which fails to capture the full spectrum of innovation within the Web3 ecosystem. Startups are seeking more inclusive dialogue with regulators to foster better understanding and to ensure that regulatory frameworks can keep pace with the rapid advancements in the Web3 space.
Expanding Sandboxing Opportunities
The 3 Sandbox Options, while designed to foster innovation, often come with unclear timelines and demanding requirements, which can be difficult for startups to navigate.Sandbox only has 1 publicly known experiment (ie; DIgiFT Tech), which shows the stringent criteria that needs to be fulfilled to enter the program.
Sandbox Express is available specifically for companies that are: (a) carrying on business as an insurance broker; and (b) establishing or operating an organised market, in which Web3 companies do not qualify.
Fully customizable for any regulated activity
First movers only
Fully customizable for any regulated activity
First movers only
Fast-tracked approvals
Fully customizable or pre-defined environments
First movers and early adopters
Financial grant for first movers
Participation in Deal Fridays