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David Lee: Singapore – an Important Node for Global Web3 Entrepreneurs

(Click here to read in Chinese)

Curiosity surrounds Singapore. Why do Coinbase, FTX, A16z and other leading Web3 companies choose to set up regional headquarters and development centers here? For some South Asian or Southeast Asian Web3 enterprises, the main entrepreneurial and R&D team are not based in Singapore, but why do they register their companies or headquarters in Singapore?

Why do Chinese innovators like TikTok and others have set their eyes on Singapore as their base for global growth? Why is a city-state known as the “little red dot”, as Lao Tzu put it, a “small country with few people”, the core node of Web3 entrepreneurship in Asia, and even the world?

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Recently, the Vice President of Singapore Economic Association (SEA), Professor David Lee Kuo Chuen of Singapore University of Social Sciences (SUSS), expressed his views on the current status and future development of the Web3 industry. The main content of the interview is as follows (conducted and written by DeFiDAONews):

DeFiDAONews (8BTC): People are both familiar with and unfamiliar with the development of Web3 in Singapore. Please tell us about your experience in the development of Web3 in Singapore.

David Lee: Ministers or regulators often describe Singapore as a major “node” of global finance or a key “node” for the development of the blockchain industry, rather than a financial or global blockchain center. I suppose this reflects the positioning of Singapore and the thoughts of the policy makers, especially the Monetary Authority of Singapore. This “node” concept is similar to the core idea of blockchain and resembles those of Satoshi Nakamoto.

As a small country, Singapore has to adopt a very open attitude towards financial and technological innovation. Foreign talents, technology and capital to develop in Singapore are always welcome. This has been the economic strategy for the country and is unlikely to change.

MAS “regulatory sandbox” and policy for fintech innovation and start-ups have focused on the use of Blockchain, Metaverse and Web3 technologies. For any financial innovations that are not permissible within the current legal framework, or are unable to fully meet the regulatory requirements, projects are allowed to experiment for potential licensing. This has led many innovative companies to move their headquarters, or their “nodes” to Singapore in the past few years.

Web3 development is in the limelight in Singapore right now.  While education institutions have trained many talents in this field. the demand for such talents continues to outstrip demand. Further demand is fueled by license applicants. At present, there are about 70 or 80 companies awaiting a license while operating under the exemption rule.

Singapore has a large number of professionals, including lawyers, auditors, technology consultants, and professional directors, leading to the successful incorporation of many new companies. To set up a company in Singapore, at least one of the directors must be a Singaporean or permanent resident. Having these professionals onboard providing advice and insights about the local market, policy and regulatory environment, startups have reduced substantially the cost of acquiring information, resulting in substantial time and cost savings.

I think Singapore has successfully attracted a lot of companies seeking licenses in the first phase of its Web3 development.  It is likely that going forward, a lot more innovative Web3 companies will choose Singapore not because of its licensing regime, but because Singapore provides one of the most friendly entrepreneurial environments, the most open, and a friendly regulatory environment with clarity in its policy.

DeFiDAONews (8BTC): What changes have you been excited about in Singapore in the Web3 startup space over the past year?

David Lee: For the longest time, I always wish that Singapore would become an important node in the blockchain and digital currency industry, and it has largely achieved its goal. I find it particularly exciting that almost all of the most influential companies in the industry have a node, or at least a representative office, in Singapore.

Satoshi Nakamoto’s original aspiration provides good guidance and is always a good reminder for the development of the Web3 industry. We should continue to work diligently to develop innovative distributed technology, and strive to achieve “decentralization”.

I don’t think Singapore can play a significant role globally in the future if we do not embrace the open node mindset, similar to how Singapore positions itself in the trustless and decentralized entrepot trade and international trade sector.

Managing financial risk is key for the development of crypto industry which advocates decentralization. For Singapore, it is clear from the authority that welcoming Web3 startups does not mean that Singapore will accept all companies as every company carry a different level of risk and complexity with decentralization. MAS has been advocating innovation with social responsibility rather than just welcoming any innovation. The central bank has taken a very cautious and sensible approach to risk management, encouraging and welcoming “responsible innovation” involving nascent technologies.

Innovation must be beneficial to society and human-centric. China emphasizes service to the people as one of the guiding principles. In order to strive for economies of scale and network effect, it makes sense for small countries to find ways to serve not only its citizens but the entire human race. Unlike Singapore. China has 1.4 billion that generate substantial domestic demand, stimulating internal circulation, with strategic depth, resulting in sustainable growth and achievable even without external circulation. Singapore is a small country with only five to six million people. The market is too small to just serve only its own citizens. Steady and sustainable development can only be achieved by adopting principles and paradigms that are open, global, universally beneficial to all parties, crowdsourcing and sharing wisdom, and common prosperity for all. Singapore’s advocacy of such a development strategy has not only been driving the development of Web3, but also created space and opportunity for China’s Web3 start-ups to venture abroad. This has been very positive and encouraging for both Singapore and China Web3 communities.

DeFiDAONews (8BTC): Everyone is talking about “Where will the Web3 revolution take place?” Is it Singapore, Dubai, Silicon Valley, or Amsterdam… Seeing that many cities are in the wave of Web3, trying to attract the attention of entrepreneurs from all over the world, what do you think is Singapore’s advantage in this global competition?

David Lee: I don’t think Singapore sees this as a competition. Rather than competing directly, Singapore has always been focused on creating a conducive “environment for innovation”.

In terms of risk control and complexity management, Singapore has earned its respect in the world. The national policy is to create an environment where, whether it’s raising kids, going to school, starting a business, or even jogging in remote areas at night, you will feel at ease without worrying much. This environment will provide a peace of mind for entrepreneurs to focus on their business, and it will also make the family who are based in Singapore feel secure in everything from health care to education.

Different regions have their own advantages. For Dubai, it has attracted a lot of talents. Their policies are similar to Singapore’s. We are learning from each other. The development of Dubai is also very good for Singapore as each country complements the other. This is what we expect from the distributed global layout and development of this industry. The diversification effect of geographical and across jurisdictions is beneficial to the development of the industry. Web3 is domainless, borderless, and stateless. With improved designed decentralized autonomous organization (DAO) over time, “De-licensing” may be the best development goal and direction for Web3.

DeFiDAONews (8BTC): For Singapore, the first thing that comes to our mind is a loose and open policy environment. You just mentioned it encourages “responsible innovation”. How do you understand Singapore’s “loose” policy?

David Lee: No matter what industry you’re in, there’s going to be a certain amount of various types of risks. Fintech, digital currencies, and DeFi are no different. But NFT as a financial product, which has become so popular recently, is riskier and difficult to manage for both regulators and investors.

First, one has to understand what the risks are. Only then one can reduce the risks, but there is no way to eliminate them.

Second, for policy consideration, it is important to understand where and how to balance the benefits, risks and complexities of Web3 technology.

When the risks and complexity far exceed the benefits brought by Web3, that is uncontrolled easing, which may lead to the unstable development of the market. Speculation cannot be eliminated from a financial point of view. There will always be speculation in an active market. When the market price far exceeds the fundamentals, there is over speculation. One of the indications is the sudden and huge demand for talents, resulting in an overheated job market. In this case, it may do more harm than good to the industry and society with a misallocation of resources. So an uncontrolled easing policy works only temporary, it is not sustainable. The so-called “Singapore-style” friendly policy environment means that the development of the market is with appropriate intervention, well regulated, and with industry consultation. It is about crowdsourcing wisdom and steady growth, rather than allowing an uncontrollable explosive growth with negative externalities.

There are issues with companies that have explosive growth without experience in risk management under crisis modes, such as those that we have seen in the Asia Financial Crisis in 1997 and Global Financial Crisis in 2008. Such companies are at great risk that may not survive despite their stellar performance when the market is on an uptrend. When the market continues to rise, the project may be seen as invincible. But when the market crashes, the responsibility is huge because of the damage to the society. Having an experienced and risk-sensitive team helps in mitigating risk and reducing the damage to market participants when it fails.

More recently, Vitalik has said that Ethereum is too focused on finance and should focus more on other areas. Not all companies that relocate to Singapore necessarily need a license, especially in areas of innovation that deal with storage, privacy protection, and decentralized technology. To have responsible innovation, it is necessary to design a holistic decentralized architecture like Satoshi Nakamoto has done, by minimizing greed, guarding against malicious elements, rather than becoming more centralized as a licensed entity. This form of centralization will inevitably lead to greed and monopolistic structure.

DeFiDAONews (8BTC): Singapore has attracted well-known companies like Coinbase, FTX, A16z, Three Arrows Capital and others. But we see that Singapore does not seem to have top public chains, and there are no DeFi, NFT, and GameFi projects. Is this correct? What do you think?

David Lee: There are many good projects in Singapore that remain low profile and contribute to society.  Many have won entrepreneurship awards from MAS and other international agencies. But they have been keeping a very low profile. Many of these projects are related to the real economy, and they are not in the limelight at all. Some of them are serving companies in the areas of risk management, privacy protection, supply chain, inclusive telecommunications and finance, decentralized identity areas, etc. Some of them have their own public chain or a DApp. But they’re certainly not competing for headlines with the DeFi or public chain projects.

In Singapore, there are global projects too, and there are also many projects developed by Chinese teams in Singapore. Many of these projects are very successful in their own way, and they are developing their capabilities steadily step by step. They are successful in my opinion because they are not speculative or in a rush to inflate their valuation. Just because you haven’t heard of them doesn’t mean they’re not doing well. In Singapore, some value their privacy and the security of their families. They don’t want their project to be one of those “only chasing hot spots” or a flash in the pan.

For the past three years, we didn’t have offline events because of COVID-19, and I think you’ll meet some of them at the Global Web3 Eco Innovation Summit – Singapore.

DeFiDAONews (8BTC): Please tell us about some of your personal and SUSS practice in the field of Web3.

David Lee: SUSS has about 30 courses related to Web3 at the undergraduate, master’s and doctoral levels, including computer science, finance, behavioral science, social sciences, mathematics and cryptography. Rather than being scattered across different schools, these courses are systematically organized across disciplines into a series of Web3 fintech courses specifically for our students.

Some students are now employed by major Web3 projects around the world. In the past three years, we have published about 15 books with help of the community. The Global FinTech Institute, backed by a number of universities in Singapore, has started a Chartered Fintech Professionals or CFtP certification program. In just one year, we have about two or three hundred students, supported by sponsorships from the industry. The newly qualified CFtPs come from central banks, and major banks, including university professors, as well as industry professionals. The Global Fintech Institute and an entity supported by MAS have also launched and working on several certificate programs around the world.

In addition, SUSS has also established a Metaverse Laboratory, as well as a Living Lab for decentralized and distributed communication projects. These projects will be displayed at the Summit, please come and see us.

DeFiDAONews (8BTC): What do you expect from this Web3.0 Summit in Singapore?

David Lee: I extend, on behalf of SUSS, an invitation to our Chinese friends and partners. We haven’t seen each other for a long time and it will be a great time to catch up.

The Summit is named “GWEI”, which of course we know is the smallest unit of ether. It can also be an acronym for Good Work and Ethos for Innovation. I think no matter what we do in Web3, we must have a sense of mission, that is, innovation is for doing good. The purpose is to be human-centric, serve the world, minimize greed, guard against malicious elements, and pursue decentralization. This is also an important theme of our Summit.

For the past three years, everyone has been discussing technology, talking about finance, and deliberating on how to collaborate and seek returns online, but there has not been an event to discuss the risks to the Web3 community and where Web3 should be heading.

I don’t think any external forces can eliminate Web3 and its community. If there is no internal consensus, no direction, and driven by greed and speculation, we will face great risk, we will go astray, and society will pay unnecessary costs. Confucius once said, “Do not do onto others what you do not want others to do to you”. “While achieving one’s own success, he should also help others achieve success. ” What we advocate is the spirit of “uniting the world, benefiting the world and understanding the world”, which is the motto of SUSS.

We’ve invited central bank leaders, and we’ve also invited some policy scholars who are very interested in the development of the industry, as well as some of you, who are important and influential people in the industry.

I hope that more will join our discussion, to find a path. We may not have an answer or consensus, but I sincerely hope that in Chinese saying: we can see a ray of sunshine in the morning mist of the industry. In the past, we have the joy of success and the lessons of failure, but there are also two other very interesting Chinese sayings: “Thousands of sails pass by the side of the sinking boat, and there are still thousands of trees in front of the dying tree.”(沉舟侧畔千帆过,病树前头万木春 Everything that does not kill us makes us more resilient).  If we find a direction with a consensus, then the industry will move forward with unity. This is my biggest expectation for the Summit. I hope everyone can see our industry that will one day be as in the Chinese saying, ” Riding joyfully in the breeze of spring and seeing the best of Chang’an flowers in one day”(春风得意马蹄疾,一日看尽长安花). When the sentiments turn positive, we can see an even brighter future ahead of us!

On July 14, 2022, the first Global Web3 Eco Innovation Summit-Singapore will be held in Marina Bay Sands Expo and Convention Centre, Singapore.

The Summit is co-organized by 8BTC’s new overseas brand, DeFiDAONews, and Singapore University of Social Sciences (SUSS), one of Singapore’s six public universities.

The Summit has invited officials from the Monetary Authority of Singapore (MAS). In addition, the Summit also invited many industry leaders and opinion leaders to discuss the development of the Web3 industry. This will be the largest offline Web3 annual event in the Asia-Pacific region in 2022.

GWEI 2022 – Singapore sign-up entry:

Users from China:

http://huodongxing.com/event/3650802978300

Users from Singapore and other countries:

https://forms.gle/QuDHGHh2E2iqnofV6

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