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Singapore Mulls a New Idea How to Boost Crypto Adoption

Sead Fadilpašić
Last updated: | 3 min read

In a recently published e-Tax draft guide, the Inland Revenue Authority of Singapore (IRAS) proposed the exemption of certain cryptocurrency transactions from GST (goods and services tax).

Source: iStock/guvendemir

To be precise, the draft is created with a goal to explain “the GST treatment for transactions involving virtual currencies/cryptocurrencies that function or are intended to function as medium of exchange” – or as the draft calls them “digital payment tokens”. They have proposed the changes to the treatment of these tokens, which are meant to better reflect their characteristics.

There are two major changes that might take effect starting with January 1st, 2020:

  • The use of crypto to pay for goods or services “will no longer give rise to a supply of those tokens.” Those who make purchases with the tokens don’t need to account for GST on the use. If the tokens are used in a transaction other than for a supply of money or digital payment tokens, “the provision of those tokens will be treated as neither a supply of goods nor a supply of services under the GST (Excluded Transactions) Order.“ If the seller of those goods or services is GST-registered, they would have to charge and account for GST.
  • The exchange of digital payment tokens for fiat currency or other digital payment tokens will be exempt from GST, as it says in the draft, and the supply of the tokens “will not contribute to your annual taxable turnover for the determination of your liability for GST registration.”

These would be significant changes, as the supply of tokens under the current law is handled as a “taxable supply of services”, meaning that any transfer, issuance or sale of tokens, for consideration by a GST-registered business, has to include goods and services tax. As the draft explains, a barter trade with two separate supplies occurs when tokens are used to buy goods or services: “a taxable supply of the tokens and a supply of the goods or services.”

To make things clear, a digital payment token is defined as digital token which:

  • is expressed as a unit
  • is fungible
  • is not denominated in any currency, and is not pegged by its issuer to any currency
  • and is, or is intended to be, a medium of exchange accepted by the public, without any substantial restrictions on its uses as consideration.

The examples of digital payment tokens given in the draft are Bitcoin, Ethereum, Litecoin, Dash, Monero, Ripple, and Zcash.
This means that stablecoins may not be included, as “any digital token that is denominated in any fiat currency or with a value pegged to any fiat currency will not qualify as a digital payment token.”

“Digital tokens that are not designed in a way such as to function, without substantial restrictions, as a medium of exchange accepted by the public or a section of the public, are not digital payment tokens.” The examples of what doesn’t qualify as digital payment tokens include:

  • Game credits or “currencies” that cannot be used outside of the context in which they are made available.
  • Tokens issued on private blockchains
  • Loyalty points.

The mining of digital payment tokens “does not constitute a supply for GST purposes”, but if a miner “performs services to an identifiable party or parties, in return for a consideration, this constitutes a taxable supply of services.”


The draft is suggested for a read to anybody who is dealing with digital tokens, including:

  • Buying and selling digital payment tokens
  • Using these tokens as payment/consideration
  • Charging a fee or commission to facilitate the transfer, purchase or sale of the tokens
  • Issuing digital payment tokens, for example via an Initial Coin Offering (ICO).

The IRAS is asking for feedback from businesses dealing in crypto, while the Ministry of Finance (MOF) will be conducting a Public Consultation on the legislative amendments for cryptocurrencies July 5-26.