CEO Hong Qi Yu of Tokenize Xchange expresses optimism over Singapore's cryptocurrency market.

Notwithstanding rigorous rules governing cryptocurrency enterprises, Tokenize Xchange is positioned to transcend these obstacles.

In discussions on cryptocurrencies, numerous perspectives are presented. Some assert it is a transient trend that will diminish, while others contend it will transform our connection with currency. Regardless of the situation, the authorities are closely monitoring the evolution of this emerging industry and prioritizing the interests of residents before permitting greater leniency for new entrants.

Tokenize Xchange, a digital currency exchange company founded in Singapore, is a participant in this emerging sector. Hong Qi Yu, a coder-turned-entrepreneur, leads the company, having embarked on his adventure in 2017 following an introduction to the Ethereum blockchain by his pals. “In April or May, I was examining the technology and determining how to purchase Ethereum; subsequently, I successfully coded my own token and deployed a smart contract,” states Qi Yu regarding his process of learning about cryptocurrencies.

The absence of a platform for purchasing or trading digital currencies prompted Qi Yu to contemplate the creation of his own. Considering the numerous challenges he encountered when engaging with the exchange platform, he sought to lower the entrance barriers with Tokenize Xchange. Upon comprehending the mechanics of cryptocurrencies, Qi Yu recognized the vast potential of this technology. “In the initial months of 2017, Ethereum was priced below US$200, and I can transfer this amount globally with internet access, which greatly intrigues me,” states the founder, noting that by the end of 2017, Ethereum's value will more than double.

To embark on this venture full-time, Qi Yu resigned from his employment and aggregated over S$120,000 from friends and several angel investors to establish Tokenize Xchange. Although the concept originated from Qi Yu and his associates, he did not anticipate assuming many roles. “In addition to my technical role, I had to assume the responsibilities of the CEO to ensure seamless operations, particularly given that Tokenize Xchange is a nascent company.” The capital he secured could only provide a brief operational period for a technology-oriented enterprise such as Tokenize Xchange, and Qi Yu was diligently seeking additional financing.

“Upon founding the company, numerous ICO projects facilitated our fundraising efforts, culminating in a total valuation of S$12 million.” The cryptocurrency market saw a positive trend, resulting in significant profits for numerous investors. As Isaac Newton stated, “What goes up must come down,” the market saw its initial significant correction in 2018. The S$12 million we acquired was ephemeral. Over the subsequent three months, the value decreased by 50 percent, followed by an additional 50 percent decline in the next three months.

PHOTO: LIM YAOHUI

The Singaporean government has advised retail investors to exercise care on the increasing enthusiasm for blockchain-based technologies. In early January of this year, the Monetary Authority of Singapore (MAS) released a guideline outlining the regulator's intention that digital currency platforms refrain from direct marketing to retail investors. This has inevitably compelled larger entities to exit the market due to the absence of a robust foundation. The nation's cryptocurrency community lacks sufficient magnitude to justify its autonomy.

Notwithstanding the adverse circumstances, Qi Yu resolved to maintain normal business operations. Currently, Tokenize Xchange operates in Singapore under the "exemption" list, allowing the company to continue its operations, including cryptocurrency exchanges, until its license application is approved, refused, or withdrawn. Qi Yu indicates that the company is awaiting the Digital Payment Token Licence from MAS and remains optimistic about the outcome, having diligently adhered to regulations and maintained communication with the pertinent authorities.

Tokenize Xchange's headquarters in Singapore has afforded it the strategic benefit of awaiting regulatory approval. This luxury of time is not granted to foreign firms, as the expense of sustaining operations is substantial, and these resources could be allocated more efficiently elsewhere. The reduction of direct advertising implies that only a select group is informed, while the objective is to engage as many individuals as possible.

Singapore has long esteemed itself as a center for innovation, supported by numerous regulations that assist enterprises exploring developing technological domains. The Monetary Authority of Singapore (MAS) is generally supportive of blockchain technology; nonetheless, it expresses concerns regarding the risks associated with cryptocurrencies and advises against individual investors acquiring them, resulting in a prohibition on enterprises aggressively marketing their goods. The regulator recognizes the potential for innovation and is eager to investigate the technology in a regulated manner. It has since initiated “Project Guardian,” which encompasses regulated financial institutions such as JP Morgan, DBS Bank, Marketnode, and the SGX to issue bonds through tokenization.

This is promising for companies such as Tokenize Xchange, as it indicates that the Singapore government is considering the expansion of the sector. In 2019, the cryptocurrency market was negative, with hardly 2 percent of the people in Singapore participating in investments. However, during the Covid period, it has expanded by a minimum of tenfold. The extent of increase indicates individuals' confidence in this nascent asset, and skepticism regarding the technology has diminished.

To bolster the company's argument for license approval, Qi Yu asserts that due diligence has been performed from the outset of operations, and other entities are involved to protect user investments. “Presently, prior to obtaining our license, routine assessments such as Vulnerability Assessment and Penetration Testing (VAPT) are conducted, and external vendors are engaged to evaluate our security and infrastructure.” The company seeks to collaborate with insurance firms for additional protection against unforeseen events. The recent Terra Luna collapse serves as a pertinent case study to explore.

Similarly, NFTs have seen a dismal beginning to the year, with reports indicating a decline in value exceeding 50 percent. However, Qi Yu remains unfazed by market fluctuations, perceiving the "crypto winter" as an inherent aspect of any business cycle characterized by self-correction periods. The company is well-positioned, Qi Yu shares, and is currently finalizing Series A investment while seeking to raise US$300 million in Series B.

Tokenize Xchange has inaugurated its NFT marketplace, “Elemint,” including its inaugural collection, “Poker Penguin.” Creators seeking to initiate their initiatives with Elemint can capitalize on the possibility to engage with Tokenize Xchange’s 250,000 users. Nonetheless, one must satisfy the conditions established by the firm. “Our NFT platform mandates that creators fulfill the following criteria: the NFT must possess utility or be supported by a tangible asset, such as a physical artwork.” There is growing pressure to adhere to ESG norms, and Tokenize Xchange is contemplating their incorporation into its criteria.

Collectors of the Poker Penguins will receive benefits such as tutoring, entry to an exclusive community, and invitations to private events. The mechanics resemble those employed by other prominent NFTs, such as Bored Ape Yacht Club, in structuring their collector pool.

A prevalent belief of NFTs parallels the idea of cryptocurrencies as a means to generate rapid financial gain. Qi Yu advises anyone interested in NFTs to perceive them as more than mere investments. It would be more appropriate to regard NFTs as the expenditure economy within the bitcoin realm.

A shift in perspective is essential for regulators, investors, and operators. To consider factors beyond mere financial profits associated with engaging in cryptocurrencies and NFTs. The government must ensure that citizens are adequately informed of the associated hazards, which can be achieved by comprehensive education in cryptocurrency literacy. Investors must exercise prudence and discern the superficial allure around this speculative asset. Operators are responsible for mitigating any consequences for their users by ensuring that protocols are established. For this triangular relationship to flourish, collective effort is essential to advocate for a safer cryptocurrency ecosystem.