While The West Regulates Crypto and AI, Singapore Innovates

Opinion by: Zac Cheah, co-founder of Pundi AI

The West is regulating itself into irrelevance. With Europe and the United States bogged down in committee meetings and legal drafts, Southeast Asia, specifically Singapore, is running live AI pilots in hospitals, refining crypto licensing through targeted enforcement, and attracting top global talent with a governance model that works.

Singapore’s secret? A sandbox-first approach that treats innovation not as a threat, but as an opportunity to be carefully tested, not endlessly theorized.

The architecture of failure

The EU’s artificial intelligence Act is a revealing case study. After years of debate, it produced comprehensive regulations that companies face significant compliance hurdles in implementing, particularly with the act’s phased rollout timeline. This has delayed adoption, especially in healthcare and finance, where clarity is mission-critical.

The US isn’t faring better. In 2024, over 40 states introduced AI bills, with no federal framework to coordinate their conflicting requirements. The result? Chaos. What’s permitted in California may be prohibited in Texas. The underlying problem is systemic: European and American regulators share the fundamental miscalculation that every theoretical risk must be eliminated before allowing real-world innovation.

Every month spent debating edge cases is another month Singapore spends deploying AI systems, attracting talent and building irreversible strategic advantages.

Singapore’s sandbox revolution

Singapore discarded the regulate-first model in favor of real-world deployment under strict regulatory containment. The sandboxes enable controlled real-world testing with mandatory emergency shutdown protocols, layered fail-safes and continuous compliance monitoring.

When the Monetary Authority of Singapore (MAS) observed crypto firms fleeing Western uncertainty in 2024, it doubled the number of licensing approvals year-over-year. But Singapore’s recent regulatory evolution tells a more sophisticated story. In June 2025, MAS imposed a decisive deadline requiring locally incorporated crypto firms serving only overseas markets to obtain proper licensing or cease operations. This wasn’t a blanket crackdown but surgical enforcement targeting regulatory arbitrage.

Related: Bitstamp granted MAS license to operate in Singapore

The move specifically addressed firms incorporated in Singapore purely to leverage its reputation while serving foreign customers without proper oversight. Companies faced a choice: commit to Singapore’s regulatory framework or exit.

Many chose to relocate rather than subject themselves to proper oversight, exposing how many used Singapore as a regulatory window dressing rather than a genuine operational base.

This enforcement action demonstrates regulatory maturity in action. Singapore built legitimate infrastructure first, authorizing 19 major cryptocurrency service providers, and then eliminated the bad actors exploiting regulatory gaps. The result? A higher-quality crypto ecosystem with clear rules and serious players, while competitors face ongoing regulatory chaos.

Critics call this experimental, but Singapore is adopting a controlled approach. Each deployment caps user exposure, mandates real-time data sharing and includes instant fallback systems. This isn’t deregulation; it’s agile, evidence-led governance that learns from reality rather than theory.

The payoff? This disciplined flexibility is generating measurable returns. Singapore is now Southeast Asia’s dominant AI hub, attracting global venture capital, world-class researchers and AI startups through favorable visa policies, robust research funding and strong industry partnerships. Its sandbox strategy is more than a regulatory experiment; it’s a compounding national advantage, turning agility into a long-term competitive edge.

The catch-up illusion

Western awareness is growing, but implementation remains sluggish. As of mid-2025, the UK’s sandbox program remains in its early stages, with only a few cohorts from the Financial Conduct Authority completed. In the US, at the federal level, rulemaking often takes multiple years, from proposal to final rule, which includes lengthy public comment and interagency review phases. Meanwhile, state-level AI laws continue proliferating faster than any cohesive federal approach can manage.

This delay isn’t neutral. It’s economically destructive. By 2030, AI could potentially contribute around $23 trillion to global GDP, but the lion’s share of that value won’t be distributed evenly. Countries with agile governance frameworks systematically position themselves to capture the majority of these benefits, leaving slower movers with far less economic opportunity.

The clock’s final tick

The message is clear: Singapore is cleaning house, cracking down on regulatory arbitrage while upholding strong frameworks for serious operators, and deploying real-time AI across critical infrastructure. The June 2025 crypto enforcement wasn’t a retreat; it was ecosystem refinement that Western regulators lack the sophistication to execute. In this race, regulatory velocity and precision are both forms of competitive advantage.

Western economies have months, not years, to abandon their policy paralysis approach and embrace evidence-based governance. Even at the grassroots level, Singapore’s advantage is compounding. The global AI race is accelerating, and like financial hubs, AI hubs will soon emerge, centred around policy, talent, access and competitive stakeholders.

Opinion by: Zac Cheah, co-founder of Pundi AI.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.