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Web3 companies are relocating from Singapore due to concerns over tightening policies and increasing competition.
The Web3 industry faces challenges from changes in the development environment in Singapore
Web3, as the next generation of the internet based on blockchain technology, is garnering widespread attention globally. It is expected to create more efficient and transparent products and services in fields such as financial technology. For a long time, Singapore has been regarded as one of the important international centers for Web3, thanks to its superior policy environment, abundant funding, and talent. However, in recent years, with the rise of other countries and regions, Singapore's advantageous position in the Web3 field is facing challenges.
Trends of Web3 Companies Relocating
Recently, several well-known Web3 companies have chosen to relocate their headquarters from Singapore in search of a more favorable development environment. For example, the smart contract platform Zilliqa moved its headquarters to London in 2021; the decentralized exchange protocol Kyber Network relocated to Israel in 2020; the cryptocurrency service platform Crypto.com moved to Hong Kong in 2018; and the blockchain data platform Interconnections moved to Australia in 2021. This trend of relocation has raised concerns in the industry about the development environment for Web3 in Singapore.
Changes in the Policy Environment
The Payment Services Act implemented in Singapore in January 2020 was once seen as support for the Web3 industry. However, a series of new regulatory measures proposed by the Monetary Authority of Singapore in October 2022, including restrictions on retail customers using leveraged trading for cryptocurrencies and regulating digital token advertising, are considered to potentially increase operational costs and compliance risks for businesses.
In contrast, other regions such as Hong Kong are actively promoting Web3-friendly policies. Hong Kong plans to implement a new virtual asset licensing system in June 2023, allowing licensed platforms to provide services to retail investors and opening up derivatives trading. These measures are attracting more Web3 companies and investors to enter the Hong Kong market.
Changes in Capital Flow
In the second half of 2022, increasing global economic uncertainty and volatility in the cryptocurrency market led to some funds withdrawing from or reducing investments in the Web3 sector. This made it more difficult for Web3 companies to secure financing, and some companies experienced a decline in valuation.
At the same time, other countries and regions are attracting Web3 funding through tax incentives, subsidy policies, and other means. For example, Switzerland passed the "Blockchain Act" in 2021, providing a clear and friendly legal framework for Web3 companies, covering aspects such as the definition, issuance, trading, and custody of digital assets. Switzerland is home to the world's largest cryptocurrency bank, offering professional and convenient financial services to Web3 companies, attracting the attention of numerous international investors.
Talent Mobility Trends
Singapore's Web3 talent pool is diverse, with excellent technical developers, entrepreneurs, and managers. However, since the second half of 2022, due to tightening foreign population policies and increasing demand for Web3 talent in other regions, some talents have started to leave Singapore, resulting in talent loss and team reductions.
Other countries are attracting Web3 talent through favorable policies. For example, Estonia launched a digital nomad visa in 2020, allowing remote workers to stay locally for an extended period and enjoy digital services. Estonia also has the largest blockchain community in Europe, providing a platform for communication and collaboration for Web3 talent, attracting a large number of international professionals.
Cost of Living Pressure
The higher cost of living in Singapore has also become one of the factors affecting the development of the Web3 industry. According to reports, the average monthly living expenses for a single person are about 3,300 SGD, while a family of three requires approximately 4,800 SGD ( excluding education costs ). The high living expenses have prompted some Web3 practitioners to consider relocating to nearby Southeast Asian countries with lower living costs, such as Malaysia, Thailand, Indonesia, and others.
Conclusion
Singapore faces multiple challenges in the Web3 space, including policies, funding, talent, and living costs. This may affect its position in the global Web3 landscape. To remain competitive, Singapore needs to seek a balance between regulation and innovation, creating a more attractive development environment for Web3 enterprises and talent.