Singapore Flush with Cryptocurrency Start-Ups but Lack Funding

We do not have a problem with our regulatory environment.  There is increasing support by MAS and government agencies in the potential for blockchains, and various kinds of tokens, both fungible and non-fungible.  What we have is scepticism by the market.  Singapore’s investment environment is still very conservative, and traditionalist.  Attitudes need to change before we see quicker uptake in non-traditional finance.  Otherwise, this erodes our competitive advantage as a financial hub.

Quora Answer: Should I Listen When My Financial Consultant Advices Me to Invest in Bitcoin?

The following is my answer to a Quora question: “My financial consultant told me to invest in Bitcoin back in 2017.  I told him I do not believe in Bitcoin.  He came back to me and told me about it being at a low right now.  What should I do?” 

What you should do is find a new financial consultant.  One of the principles of investment is to never put your money into something you do not understand.  That is always a recipe for disaster.  Now, regarding Bitcoin itself, the price is dropping for a reason.  What lead to its massive price increase was pure speculation.  Bitcoin does not have an underlying asset with any value.  The intent of Bitcoin was that it be a means of exchange, precipitating a secondary market to sustain demand, and thus value.  That has not happened, and it is unlikely to happen.  The fact that your financial consultant is pushing for this calls his judgement into question.

Quora Answer: What Do You Think about Investing in Stablecoins?

The following is my answer to a Quora question: “What do you think about investing in stablecoins?”

I think very poorly of them.  In theory, stablecoins are cryptocurrencies that are pegged to a currency, most often the US Dollar, or the Swiss Franc, or pegged to an exchange traded commodity, mostly gold.  This peg is supposed to make stablecoins less volatile, and more attractive to mainstream finance.  Since it is pegged to a known currency or commodity, it is supposed to facilitate a secondary market by making them liquid by being more easily exchangeable.

Here is the main problem: how do we trust this peg, when the backing reserves cannot be independently audited?  Also, there is still some underlying volatility inherent with currencies and commodities.  This is more so for commodities.  When the market undergoes upheaval, how will they maintain the peg?  To date, I am very sceptical that any “stablecoin” has lived up to the criteria of actually being stable.

Another point of consideration is regulatory concerns, which means this peg is either impossible to maintain, or lacks credibility.  For example, Basis, the most high profile and well-funded stablecoin, shut down in December 2018.  Their official reason was an unfavourable regulatory landscape.  We could argue that the regulatory landscape is unfavourable because they cannot convince anyone that they have the financial strength to maintain a viable peg over an extended period of time.  They raised US$130 million in funding.  That is not enough to do what they want to do.