Singapore Takes the Lead Over Hong Kong in Asia’s Crypto Hub Race – Here’s Why

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As a researcher who has spent years studying the dynamic world of digital assets and their regulatory landscapes, I’ve witnessed firsthand how these subtle differences can shape entire industries. Singapore’s strategic approach to crypto regulation seems to be paying off, with its balanced framework fostering collaboration between newcomers and established players. On the other hand, Hong Kong’s more restrictive policies appear to be hindering growth in the digital asset sector.

Based on a Bloomberg report from recently, it appears that by the year 2024, Singapore managed to cement its status as one of Asia’s primary digital asset centers, outpacing Hong Kong in terms of “regulatory effectiveness” and attractiveness for cryptocurrency companies.

This year, the city-state has issued 13 crypto licenses, which is over twice the amount given in 2023. Notable international companies like OKX, Upbit, Anchorage, BitGo, and GSR have received regulatory approval, showcasing Singapore’s increasing appeal for digital asset service providers.

Contrarily, the licensing system in Hong Kong has led to “more gradual development,” with just seven completely licensed platforms available, along with several others possessing temporary licenses.

Regulatory Differences Shape Regional Competitiveness

In the face of this gap, professionals within the industry attribute Hong Kong’s slow pace primarily to regulatory hurdles. These experts emphasize that the city’s tough regulations concerning the custody of client funds, token selection, and de-listing procedures have created obstacles for exchanges to thrive financially.

Moreover, only high-volume cryptocurrencies such as Bitcoin and Ethereum are allowed for trading, thereby reducing the possibilities for altcoin investment. Consequently, major platforms like OKX and Bybit have abandoned their license applications in Hong Kong, instead shifting their attention towards Singapore.

Angela Ang, senior policy adviser at consultancy TRM Labs noted:

In simpler terms, Hong Kong’s rules for cryptocurrency exchanges are stricter than Singapore’s in several key aspects, including how they handle user assets and decide which tokens to list or remove. This difference might make Singapore a more attractive choice.

Diverging Approaches to Crypto Innovation

Singapore’s regulatory environment is often commended for striking a harmonious balance, fostering partnerships between emerging financial players and well-established institutions.

According to Bloomberg, initiatives such as Project Guardian and Global Layer 1, which are supported by the Monetary Authority of Singapore, are designed to speed up the process of tokenizing assets and increase the use of blockchain technology in the wholesale financial sector.

These actions have made Singapore an attractive, reliable option over the long term for businesses looking to establish a regional base for their digital asset management.

Although Hong Kong has made significant strides, like selling HK$6 billion worth of tokenized green bonds and initiating Bitcoin and Ethereum spot ETFs on the stock exchange, its acceptance of these technologies has been more gradual compared to some other regions.

In Hong Kong, the total value of funds managed by these ETFs is approximately $500 million – a figure that pales in comparison to the staggering $120 billion handled by similar products in the U.S.

From my perspective as an analyst, it seems that Hong Kong’s focus on well-established financial institutions may create a challenging environment for innovative startups in the digital asset sector, potentially hindering their growth. As Roger Li, co-founder of One Satoshi, put it, “It’s quite demanding to meet the high standards and become profitable.

Featured image created with DALL-E, Chart from TradingView

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2024-12-25 02:41