Author of the opinion: Zac Cheah, Co-founder of Pundi AI
The West is regulating itself into irrelevance. While Europe and the United States are mired in committee meetings and legislative drafts, Southeast Asia, particularly Singapore, is running real-time AI pilot projects in hospitals, refining cryptocurrency licensing through targeted enforcement, and attracting top global talent with effective governance models.
Singapore's secret? A sandbox-first approach that views innovation as an opportunity rather than a threat, requiring careful testing instead of endless theorizing.
The EU AI Act is an instructive case study. After years of debate, it established comprehensive regulations, but companies face significant compliance hurdles during implementation, particularly with the phased rollout timeline of the act. This has delayed adoption, especially in healthcare and finance, where clarity is crucial.
The situation in the U.S. is not better. In 2024, over 40 states introduced AI bills, but there is no federal framework to coordinate their conflicting requirements. The result? Chaos. What is allowed in California may be banned in Texas. The fundamental issue is systemic: both European and American regulators fundamentally misjudge that every theoretical risk must be eliminated before allowing real-world innovation.
For every month spent debating edge cases, Singapore spends a month deploying AI systems, attracting talent, and building an irreversible strategic advantage.
Singapore has abandoned the regulatory-first model in favor of supporting real-world deployment under strict regulatory constraints. The sandbox enables controlled real-world testing, equipped with mandatory emergency shut-off protocols, layered fail-safes, and ongoing compliance monitoring.
When the Monetary Authority of Singapore (MAS) observed cryptocurrency companies fleeing Western uncertainty in 2024, it doubled the number of licensing approvals year-on-year. However, Singapore's recent regulatory evolution tells a more complex story. In June 2025, MAS set a decisive deadline requiring cryptocurrency companies registered locally but serving only overseas markets to obtain proper licensing or cease operations. This is not a one-size-fits-all crackdown but a precise enforcement against regulatory arbitrage.
This move specifically targets companies that register in Singapore purely to leverage its reputation while serving foreign clients without proper oversight. Companies face a choice: commit to complying with Singapore's regulatory framework or exit.
Many companies chose to relocate rather than accept proper oversight, exposing how many used Singapore as a regulatory façade rather than a genuine operational base.
This enforcement action demonstrates the practical application of regulatory maturity. Singapore first established a legitimate infrastructure, authorizing 19 major cryptocurrency service providers, and then eliminated bad actors exploiting regulatory loopholes. The result? A higher-quality cryptocurrency ecosystem with clear rules and serious participants, while competitors face ongoing regulatory chaos.
Critics call it experimental, but Singapore adopts a controlled approach. Each deployment limits user exposure, mandates real-time data sharing, and includes instant rollback systems. This is not deregulation; it is agile, evidence-based governance that learns from reality rather than theory.
The payoff? This disciplined flexibility is yielding measurable returns. Singapore is now the dominant AI hub in Southeast Asia, attracting global venture capital, world-class researchers, and AI startups through favorable visa policies, strong research funding, and robust industry partnerships. Its sandbox strategy is not just a regulatory experiment; it is a composite national advantage that transforms agility into long-term competitive edge.
Western awareness is growing, but implementation remains slow. By mid-2025, the UK's sandbox program is still in its early stages, with the Financial Conduct Authority having completed only a few batches. In the U.S., at the federal level, it often takes years from proposal to final rule, including lengthy public comment and inter-agency review phases. Meanwhile, state-level AI laws continue to surge at a pace faster than any coherent federal approach.
This delay is not neutral. It is economically destructive. By 2030, AI could contribute approximately $23 trillion to global GDP, but the largest share of this value will not be evenly distributed. Countries with agile governance frameworks systematically position themselves to capture most of these gains, leaving slower-moving nations with far fewer economic opportunities.
The message is clear: Singapore is cleaning house, cracking down on regulatory arbitrage while maintaining a strong framework for serious operators and deploying real-time AI in critical infrastructure. The cryptocurrency enforcement in June 2025 is not a retreat; it is a reflection of the Western regulators' lack of execution complexity in ecosystem refinement. In this race, regulatory speed and precision are both forms of competitive advantage.
Western economies have months, not years, to abandon the policy paralysis approach and embrace evidence-based governance. Even at the grassroots level, Singapore's advantages are compounding. The global AI race is accelerating, and just like financial centers, AI hubs will soon emerge, centered around policy, talent, access, and competitive stakeholders.
Author of the opinion: Zac Cheah, Co-founder of Pundi AI.
Related: Santiment: The call for "buying the dip" in cryptocurrency surges, possibly indicating more downside potential.
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