Recently, both
Hong Kong and
Singapore released policy statements and pilot projects that show strong support for cryptocurrency innovation. This stirred up heated discussion about how these two financial hubs will compete with each other. However, what is really exciting is that these two hubs can complement each other, attract global resources and make Asia into a leading market for
cryptocurrency adoption.
Hong Kong was one of the most important cryptocurrency trading hubs in the world until the regulatory environment turned restrictive in 2019. Back then, Hong Kong was the home of influential cryptocurrency exchanges like BitMEX and
FTX. Many early adopters in the cryptocurrency community still have strong emotional ties to Hong Kong. That is why the Hong Kong government’s new enthusiasm toward cryptocurrency and Web 3.0 innovation was so widely celebrated as a sign that “Hong Kong is back.”
Singapore has benefited more than anywhere else from the exodus of Chinese cryptocurrency entrepreneurs, prompted by
China’s crackdowns, over the past two years. The Token2049 conference in Singapore last month turned out to be one of the most well-attended global cryptocurrency and Web3 events in recent years despite the bear market that this industry is facing. In Token2049, we found that many Chinese teams that just relocated here are still actively building products. Meanwhile, deal makers, investors and industry leaders flew in from all over the world because they believed in the market potential of Asia. Singapore proved to be a place of convergence, even when “decoupling” is happening in other places.
The regulatory frameworks of Hong Kong and Singapore are still under development, and their detailed policies will continue to evolve. But with FTX’s unfolding drama, we can expect both Hong Kong and Singapore to tighten regulation on speculative trading, though some differences are already emerging between the two governments’ approaches.
Singapore has stringent measures that limit retail investors’ exposure to digital assets. While such measures aim to protect retail investors from speculative activities, they also could create the problem of unequal access, which puts retail investors at a disadvantage compared to accredited and institutional investors.
Hong Kong, on the other hand, is likely to be more open to retail investment activities. In its statement, its Financial Services and the Treasury Bureau said that they would conduct a public consultation about retail access, in particular, opening up the possibility of having exchange-traded funds (ETFs) of digital assets.
The good thing is, entrepreneurs and investors in the cryptocurrency and Web3 space do not have to make a choice between Singapore and Hong Kong. The flow of capital and people – especially with the recent easing of
Hong Kong’s Covid-19 travel restrictions – is easy enough for organisations to operate in both places and make the best of each’s advantages. The competition between Hong Kong and Singapore also means that they will stimulate each other into taking bolder and faster steps.
