The potential for Web3 in Singapore has been growing in the last few years, with increased investment, emerging blockchain and Web3 companies, and a push to establish Singapore as a Web3 hub. According to insights from a Web3 salon held last year in the city-state, experts believed that the next iteration of the internet is a technological revolution and that Asian companies would lead the global innovation trend.
The new internet is focusing on decentralising control from major tech and financial institutions and creating a more inclusive online experience through open-source development of the web. Web2 is the current version, which relies on institutions managing the web and acting as middlemen in whatever people do when using the internet.
Here’s everything you should know about Web3 in Southeast Asia
According to the Equinix 2022 Global Tech Trends survey, 62% of respondents believed that Web3 would replace Web2 within the next five years. Other respondents, at 5%, thought Web3 had already replaced Web2. Looking at developments in Singapore’s gaming industry, many Web3 games are currently available, which may point to the idea that it is already taking over.
Developing Singapore as a Web3 hub
Singapore is well poised to achieve its goal of becoming a Web3 hub because it has built a global and competitive tech industry that continues exploring new technologies and innovations. It is an important trading centre for the Association of Southeast Asian Nations (ASEAN). The city-state has attracted international tech giants such as Google and Meta and over 5,000 other US technology companies. The US Department of Commerce also states that Singapore markets itself as a testbed for new technologies.
In 2014, Singapore introduced its Smart Nation plan to digitally transform the country and inspire a wave of digitalisation in ASEAN. Thus, many investments were directed toward digital infrastructure and businesses adopting a digital strategy. The COVID-19 pandemic accelerated business digitalisation and shifted consumer behaviour to online spending, purchases, and banking transactions.
While the country is blessed with a young and tech-savvy population, there is still a need to invest more in digital infrastructure and adopt better business strategies to address the switch to internet use. Furthermore, the government had to play a significant role in nurturing, investing, supporting, and regulating the growing digital economy. The development of the tech sector led to innovative solutions such as financial technology (fintech), blockchain, and now Web3, cementing Singapore’s place as a tech-friendly environment.
Work has evolved to hybrid and in-premise operations, meaning digital meetings and conferences have become commonplace in Singapore. These changes have saved the planet from air travel pollution.
Challenges to Singapore becoming a web3 hub
Web3’s main challenges in Singapore are
- The regulatory climate.
- The cost of digital transformation.
- Blockchain development’s impact on the environment.
Others include cyber security, inadequate literacy on Web3 technology, and poor user experience because the new internet is still developing. Approvals for licence applications by cryptocurrency businesses have slowed down in the city-state leading to some firms leaving, which is a red flag for Web3 investors.
Speaking at the Singapore Fintech Festival 2022, Brian Armstrong, the CEO and co-founder of cryptocurrency exchange platform Coinbase, said that Singapore’s goal of becoming a Web3 hub was incompatible with its regulatory approach to crypto. The government continues to warn about the speculative and volatile nature of the currency and has subsequently banned retail crypto trading and advertising in public and on social media.
Armstrong addressed Sopnendu Mohanty, chief fintech officer of the Monetary Authority of Singapore (MAS), and said crypto should be treated like other financial service businesses rather than how it is being managed in the nation.
Mohanty had a different take on Armstrong’s comments and said that while they believe Web3 is the future, they wanted to ensure the ecosystem was secure for users. Retail investors were exposed to unknown risks, and many were taken advantage of or lost money. He pointed out that as long as the cryptocurrency was considered a safe asset and currency, they would have no problem with it. The Authority’s position was that they needed to protect the customers.
Ravi Menon, MAS Managing Director, reinforced the point by saying Singapore wanted to be a crypto hub that innovates, increases efficiency, and reduces risks in financial transactions instead of a hub for speculating and trading cryptocurrencies.
What lies ahead?
Despite these serious challenges, Web3 in Singapore could be heading in the right direction. A large number of blockchain and Web3 companies flowing into the country indicates that investors and businesspeople already see Singapore as a Web3 hub. Also, many Web3 conferences are being held there, like the Alibaba Web 3.0 Cloud Day Singapore 2022 which was held last year.
Misunderstandings about MAS’s position should not chase away investors. Instead, it is an opportunity to collaborate with the Authority to develop a robust Web3 ecosystem in Singapore. When everyone works together, the city-state can succeed in becoming a Web3 hub.