S’pore professional and retail investors more active than institutional ones in crypto market: Study

SINGAPORE - With cryptocurrency becoming more common as a payment method in Singapore, professional and retail investors are now more active in the market, a Chainalysis study found.

In the second quarter of 2024, the total value in crypto received by merchant services in Singapore was nearly US$1 billion (S$1.3 billion), much higher than any other quarter in the past two years, with values between US$4.9 million and US$489.1 million.

The blockchain analytics firm on Sept 11 said the rising trend of crypto payments is interesting as Singapore is a market where retail fiat payment systems are already highly efficient. It noted that this hints at the ubiquity of crypto holdings among the population.

The report said Singapore retail and professional investors are the two most significant groups when it comes to year-over-year growth by crypto transfer size.

This is a shift away from institutional investors who have mainly driven the adoption of crypto in the past few years.

“It is possible that more favourable market conditions in comparison to the previous year’s conditions have motivated these investors to increase their participation,” the report said.

It added that the regulators’ efforts to increase consumer protection rules may have given retail and professional investors more confidence to enter or re-enter the crypto markets.

In the past two years, there have been more merchants that use crypto as a payment method for a variety of services. For instance, ride-hailing operator Grab in March allowed users to top up their e-wallets in cryptocurrencies in a tie-up with payment firm Triple-A.

The study also found a pickup in stablecoins. For instance, it said more than 75 per cent of the value of stablecoin XSGD transferred between the third quarter of 2022 and the second quarter of 2024 took place in sizes of $1 million or below. Almost 25 per cent of XSGD transfers were under US$10,000, suggesting a strong base of retail activity, the study said.

“In contrast, other stablecoins pegged to the United States dollar are mainly transferred in large sizes of above US$1 million, suggestive of institutional activity,” Chainalysis noted.

It added that regulatory clarity could have given a boost to investor confidence in stablecoins.

In August 2023, the Monetary Authority of Singapore (MAS) firmed up its stablecoin regulatory framework, including new requirements for stablecoin issuers, segregation details and custody rules for customer assets.

In April 2024, MAS introduced crypto custody and licensing requirements.

The study also found that global crypto activity spiked to an index score of 0.8 in the first quarter of 2024 from 0.39 in the fourth quarter of 2023. The peak earlier this year is the highest between the third quarter of 2021 and the second quarter of 2024.

The report said the launch of the Bitcoin exchange-traded funds in the US triggered an increase in total value of Bitcoin activity across all regions, especially in North America and Western Europe.

Meanwhile, the year-over-year growth of stablecoins was higher among retail and professional investors. 

The study added that growth in crypto adoption in 2023 was driven primarily by lower-middle income countries such as India, Nigeria and Ukraine.

It also said that in 2024, crypto activity rose across countries of all income brackets, but there has been a pullback in high-income countries like the US and Saudi Arabia since the start of the year.