June 9, 2023
By Anjali Kochhar
Singapore and Hong Kong are emerging as potential global hubs for the cryptocurrency industry as the United States intensifies its regulatory crackdown, according to industry executives. The US Securities and Exchange Commission (SEC) has imposed fines and penalties on crypto-lending firms, and banks have tightened policies, making it difficult for crypto companies to access credit. As a result, Singapore and Hong Kong, Asia’s leading financial centres, are making significant progress in positioning themselves as attractive destinations for crypto businesses, a South China Morning Post report has said.
Hong Kong’s Securities and Futures Commission recently finalised rules that will allow retail trading of cryptocurrencies starting from June 1. Licensed exchanges will be permitted to sell cryptocurrencies with substantial market capitalisation and high liquidity to retail investors, and platforms can now apply for a license. This move is expected to make Hong Kong a cryptocurrency hub, especially given its proximity to China.
Singapore, known for its well-established regulations, has been actively attracting companies to set up operations in the city-state for the past two years. The consistency of its regulations and its support for blockchain technology have made it an appealing choice for crypto firms. The country views cryptocurrencies as a new technology and aims to provide more freedom to build Web3, a decentralised web ecosystem that allows users to retain ownership of their data.
Industry insiders, such as Chen Zhuling, co-founder and CEO of RockX, believe that Hong Kong and Singapore are ideally positioned to become crypto hubs and expect a surge in activity in both cities. Cryptocurrency exchanges are actively considering establishing operations in Hong Kong, and discussions are underway between various parties.
While the regulatory actions in the US have raised concerns about a potential exodus of blockchain companies, some experts believe that Southeast Asia and Australasia stand to benefit from this shift. Countries like Vietnam and India have seen rapid cryptocurrency adoption by consumers, but regulatory frameworks governing digital assets are not yet established in many other places, apart from Singapore and Hong Kong.
Bitget, a cryptocurrency exchange that launched a $100 million fund in Hong Kong in April to invest in Web3-friendly ventures, shares the optimism regarding the prospects of both cities. The managing director at Bitget, Gracy Chen, highlighted the potential growth in Asian markets and the establishment of Hong Kong and Singapore as crypto hubs.
However, challenges remain, including regulatory arbitrage and cross-border risks stemming from the differences in regulatory regimes between the two cities. Concrete evidence of a large-scale shift of companies from the US to Asia is still anecdotal, although Singapore and Hong Kong’s regulatory frameworks provide legal certainty that benefits businesses.
As the US regulatory landscape becomes more challenging for the cryptocurrency industry, Singapore and Hong Kong’s favourable conditions and supportive regulations are poised to attract and nurture crypto businesses, solidifying their positions as emerging global crypto hubs.
About the author
Anjali Kochhar covers cryptocurrency stories in India as well as globally. Having been in the field of media and journalism for over three years now, she has developed a sharp news sense and works hard to present information that goes beyond the obvious. She is an avid reader and loves writing on a wide range of subjects.