Evaluating Cryptocurrency's Influence on Singapore's Economy

This essay examines the effect of cryptocurrency on Singapore's real economy, focusing on its advantages, disadvantages, and the regulatory approaches adopted by the Monetary Authority of Singapore (MAS). It begins by defining the real economy and cryptocurrency, highlighting Singapore's status as a highly developed free market. The essay critically evaluates cryptocurrency's accessibility, ease of payment, and security, while also addressing concerns such as the learning curve, potential for financial loss, and security risks. The analysis includes the government's efforts to regulate and explore cryptocurrencies, the influence of blockchain technology, and international collaborations. It also addresses concerns about fraudulent activities and the need for prompt regulatory schemes. The essay concludes that while cryptocurrencies currently pose limited systemic risks, their increased use could significantly impact financial policy and the broader financial system.

Running head: CRYPTOCURRENCY IN SINGAPORE
Cryptocurrency in Singapore
Name of the Student
Name of the University
Author Note

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Table of Contents
Introduction......................................................................................................................................2
Discussion........................................................................................................................................2
Conclusion.......................................................................................................................................2
References........................................................................................................................................2

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How crypto currency affect the real economy in Singapore
Introduction
The real economy refers to that part of the economy that is concerned with the actual
producing of the commodities whereas the other part of the economy is concerned with the
transactions in the financial market that includes buying and selling of the goods and serviced
that have already been already produced. When it comes to the economy of Singapore, it is a
highly developed free market that has been ranked as the most open economy in the world. The
economy of Singapore is also known for it quality of being the least corrupted pro-business in
the world. The crypto currency refers to the recent trends in the currency policy in the global
economy (Narayanan et al., 2016). The digital asset is used as a medium of exchange. it is also
known as virtual currency and electronic money. The fist crypto currency was created in the year
2009, known as Bit coin. Since then, many other crypto currencies are used like the Altcoins.
Singapore, being the most techno-savvy has adapted crypto currency like the Bit coins as the
online exchange for transactions, as they are free from regulations and faster mode of digital
exchange.
Research Question:
The research question formulated for this study at hand is as mentioned below:
- What is the effect of the Crypto currency in the real economy of Singapore?
Research approach:
- The study has considered the use of deductive approach to resolve the questioned that
has been aroused. The deductive approach would help in explaining the relationships

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between the concepts and the variables and make the quantitative measurements. It links
the various theories that have been identified in the research.
Discussion
Background of Crypto currency
In the year 1983, a cryptographer in American named David Chaum conceived the e-
cash, which is cryptographic electronic money. In 1995, he implemented it through Digital Cash,
which is an early form of cryptographic electronic payments that requires the use of a software in
order to extract notes from a bank and allocate particular encrypted keys before it can be sent to a
receiver (Young, 2017). This allowed the crypto currency to be undetectable by issuing the
government, bank, , or a third party.
Critical evaluation of Crypto currency in Singapore
There various advantages and disadvantage of crypto currency in the real economy of
Singapore, according to the handbook of Block chain, Digital Finance, and Inclusion, by Chuen,
& Deng, (2017) the advantages of crypto currency is that it is one of the most easily accessible
mode of exchange. The digital money is readily assessable by the public as it is a decentralized
operation and the investors from all over the world can use this technique. The process of
making payments in the crypto currency economy is easy, within seconds without the use of any
kind of financial instruments. The payments of the transactions can be made. Moreover, the
transactions made with help of crypto currencies are highly secured as it uses the NSA
cryptography. Until and unless it is hacked there is no risk attached with it. However, as per
Hayes, in his empirical study leading to a cost of production model for valuing bit coin, (2017),
he argues with the above discussion and therefore, he highlights the various drawbacks of the

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same. Since it is a new concept and needs a sound learning curve. People may invest without any
proper knowledge and lose money to something they are not aware of. In addition to that, there is
a possibility of losing all the money that is invested. Moreover, the money is stored in the form
of digital currency on the phone; the passwords and the security password are needed to be
remembered, losing the bit coins means that the user will not be able to recover it, even with the
help of authorized support. Therefore it is one of the limitation of the of Bit coins.
The effect of Crypto currency in the real economy of Singapore:
Finding and Analysis
According to government of Singapore, they are making efforts to regulate and explore
the process of crypto currencies. Since the use of digital money has been effectively used by the
organizations of Singapore for manufacturing the products and service, the government is
making a plan to legitimate a stable market that wills benefit them as well as the investors
(Blankenship, 2017).
As crypto currencies are evolving the and trying to keep up with the technology of block
chain the economy of Singapore is keeping up with this new trend that is likely to be used
extensively (Yamada, Nakajima & Sakamoto, 2016). Central banks worldwide are supervising
on this occurrence. The director in charge of managing of the Monetary Authority of Singapore
(MAS) Ravi Menon recently announced that the government of Singapore would supervise the
risk market, but will not control crypto currencies for the time being. The chief impulsion for the
formation of Bit coin is a result of the worldwide financial crisis and the resulting concerns about
the fragility and opacity of the global system of banking. This os one of the factors that
motivated to create the bit coins in 2009 when it was launched by Satoshi Nakamoto.

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As said in the hand book of Lim “A Facilitative Model for Crypto currency Regulation”
(2015), the Economy of Singapore that plans to be a “Smart Financial Centre”, is among the
pioneers in this concept along with other countries who are adopting this concept like Australia,
Canada and South Korea. The Monetary authority of Singapore (MAS) has been exploring the
usage of digital money in Singapore to make a smooth progress of the interbank costs. It is with
such tests that makers of policy can judge how to best exploit their repayment in terms of
contracts which are smart and reduced costs of transfer of funds, especially payments if cross-
border, for instance while putting in place suitable policy and disclosure necessities to minimize
various risks by virtual currencies (Chuen & Deng, 2017).
As mentioned by Utomo, Makers of policy also need to work intimately with
industrialist to recognize the practicalities and sustain dialogue with regulators in other countries
because of the global scope of the issue (Utomo, 2018). The MAS and the Hong Kong Monetary
Authority (HKMA) in recent times signed an agreement to make a collaboration on projects
based on technologies of block chain.
In the working paper named Liquidity Regulation, Extended Repo and the Real Economy
(Allen & Gale, 2016,) debated that crypto currencies and fintech could benefit from advanced
research projects. Despite the explosion in crypto currencies, there has been limited academic
work in the area there might be scope in Singapore to launch a large-scale research policy project
on issues related to technology of block chain, central banking policies, and the impact on how
services in the government could be delivered.
Hayes has critically revealed in his journal ‘Crypto currency value formation’ that there
are valid concerns about fraudulent and laundering of money or any other activities that are

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illegal including the terrorism of finance due to the unidentified transactions nature, and the
limited regulatory structure to administer transactions concerning digital tokens (Hayes, 2017).
Moreover, the activity in question can change quickly, as was the case with the recent bit
coin split. Technical questions about the block chain provoked the currency to diverge into two
branches: the new off shoot known as bit coin cash and bit coin; another divide into bitcoin gold
is said to have occurred recently. Regulation schemes must thus be prompt to be helpful (Li &
Wang, 2017).
Conclusion
The rise of crypto currencies and Initial Coin, from the perspective of financial stability
offering in Singapore may not have systemic risks due to their hitherto limited linkages with the
broader financial system and real economy. But, if the concept of Crypto currencies in Singapore
becomes more prevalent in their use, they have cleared prospective for systemic risks. In
addition, if crypto currencies are more broadly used, it will have considerable affect on the
effectiveness and conduct of financial policy, issuance and use of the currencies like legal tender.

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References
Allen, F., & Gale, D. (2016). Liquidity Regulation, Extended Repo and the Real Economy.
Working Paper, Brevan Howard Centre, Imperial College, London.
Blankenship, J. R. (2017). Forging Blockchains: Spatial Production and Political Economy of
Decentralized Cryptocurrency Code/Spaces (Doctoral dissertation, University of South
Florida).
Chuen, D. L. K., & Deng, R. H. (Eds.). (2017). Handbook of Blockchain, Digital Finance, and
Inclusion, Volume 1: Cryptocurrency, FinTech, InsurTech, and Regulation. Academic
Press.
Hayes, A. S. (2017). Cryptocurrency value formation: An empirical study leading to a cost of
production model for valuing bitcoin. Telematics and Informatics, 34(7), 1308-1321.
Li, X., & Wang, C. A. (2017). The technology and economic determinants of cryptocurrency
exchange rates: The case of Bitcoin. Decision Support Systems, 95, 49-60.
Lim, J. W. (2015). A Facilitative Model for Cryptocurrency Regulation in Singapore.
In Handbook of Digital Currency (pp. 361-381).
Narayanan, A., Bonneau, J., Felten, E., Miller, A., & Goldfeder, S. (2016). Bitcoin and
Cryptocurrency Technologies: A Comprehensive Introduction. Princeton University
Press.
Utomo, G. O. T. (2018). THE INFLUENCES OF CRYPTOCURRENCY ON ECONOMIC
GROWTH: CASE STUDY OF BITCOIN IN 5 ASIAN COUNTRIES 2011-2016
PERIOD. Jurnal Ilmiah Mahasiswa FEB, 6(2).

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Yamada, Y., Nakajima, T., & Sakamoto, M. (2016, November). Blockchain-LI: A Study on
Implementing Activity-Based Micro-Pricing using Cryptocurrency Technologies.
In Proceedings of the 14th International Conference on Advances in Mobile Computing
and Multi Media (pp. 203-207). ACM.
Young, J. (2017). Bitcoin and Cryptocurrency Technologies: The Ultimate Guide from Beginner
to Expert.