SINGAPORE Trends and Developments Contributed by: Lee Woon Shiu and Catherine Cheung, DBS Private Bank
Singapore as a Gold Hub Due to a rising demand for precious metals across Asia and a growing global need for secure asset havens amid geopolitical uncertainty, Singapore is strength - ening its position as a top-tier gold trading and stor - age hub globally. To achieve this, Singapore is imple - menting several key initiatives, including establishing an over-the-counter gold clearing system for physical gold (Loco Singapore), which will be facilitated by the Singapore Exchange and involve six clearing banks. MAS will also introduce central bank gold-vaulting services by October 2026, providing foreign central banks and sovereign entities with a secure option for their gold reserves. This service strengthens Singa - pore’s appeal as a location where reserve assets can be securely held, actively managed, and connected to broader market liquidity during Asian trading hours. Under the Schemes, eligible funds were restricted from holding more than 5% of their total investment portfolio in physical precious metals (like gold and sil - ver) to maintain their tax-exempt status. MAS is work - ing with industry players to develop gold investment products, and will remove this 5% cap on physical precious metals under the Schemes for eligible funds and SFOs. These developments are attracting interest from investors and institutions, particularly from markets like India, Indonesia and Vietnam, who are drawn to Singapore’s reputation for stability, security and strong governance. Financial institutions are providing innovative offerings such as tokenised gold, leverag - ing blockchain technology to enhance liquidity and accessibility for investors. In addition, Singapore is strengthening its role as a key RMB clearing hub, facilitating cross-border trade and investment flows between China and the rest of the world, further diversifying its financial service offerings for international clients. This role is crucial for busi - nesses engaged in trade and investment with China, providing efficient and reliable channels for RMB transactions and supporting Singapore’s broader ambition to be a leading financial gateway for Asia.
Evolution of Wealth Holding Structures Historically, international wealth preservation relied heavily on self-managed, passive offshore corporate vehicles (eg, classic holding companies incorporated in the British Virgin Islands or Cayman Islands). With increasing global transparency, the use of convention - al self-managed offshore companies is declining. The aggressive enforcement of Controlled Foreign Corpo - ration (CFC) regimes across some regional jurisdic - tions, combined with the comprehensive roll-out of the Common Reporting Standard (CRS) and global tax transparency mandates, has rendered passive off - shore entities highly ineffective and legally vulnerable. Singapore is witnessing a rise in sophisticated onshore Singapore-domiciled SFO structures that incorporate Singapore companies and trusts, combined with Lim - ited Liability Companies (LLCs), partnerships and vari - able capital companies (VCCs), to meet tax incentive requirements and demonstrate substantial local eco - nomic activity. Private trust companies (PTCs) are also gaining popularity, especially for family-owned busi - nesses, due to their ability to hold a broader range of assets (including non-bankable assets like operating businesses and cryptocurrencies) and integrate family governance provisions. The VCC as a multi-family office platform The VCC corporate structure was introduced in 2020 in Singapore, and has become a preferred corporate vehicle for wealth consolidation. Operating as either a standalone fund or an umbrella structure with multi - ple segregated sub-funds, the VCC enables absolute statutory ring-fencing of assets and liabilities between different sub-funds. This segregation is highly advan - tageous for multi-family offices managing wealth for distinct, unrelated family branches, and for single fam - ilies segregating distinct asset classes or generational portfolios within a single corporate architecture. Since its launch, over 1,300 VCCs have been incorporated or re-domiciled in Singapore by regulated fund man - agers. VCCs offer structural capital flexibility, as the capital can be subscribed and redeemed at net asset value (NAV), and distributions can be paid directly out of capital – a statutory mechanism strictly prohibited under the standard corporate company law.
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