Hong Kong competes against Singapore around Asia's crypto crown

Hong Kong started a competition to become Asia's crypto capital, since investors and managers warn that the rival Singapore could gamble its lead with its swivel to strict regulation.

The sudden shift in Hong Kong last week towards clear rules for private investors for trading digital assets follows for years of unclear the supervisory authorities. This prompted some companies to build a greater presence in the city and to benefit from the demand from the Chinese mainland where the crypto trade is prohibited.

to underline the problem, Huobi Global, one of the world's largest cryptocurrency exchanges, confirmed last week that she would move her headquarters from China, and looked at the Caribbean.

"This type of regulation [in Hong Kong] In this kind of positive development we, I think [it for] five years," said Lennix Lai, Director of Markets at OKX, a crypto exchange with offices in Hong Kong and Singapore

"The regulatory status of Hong Kong is very important on a global level.. Industry participants are looking for a reasonable license all over the world, but what they really want is a regulatory status in a large financial center," added Lai.

This delay is reflected in the size of the Hong Kong market compared to its large rival Singapore. With around $ 74 billion, Hong Kong is behind Singapore in relation to the value of the crypto-assets received in June, the latter, according to Chainalysis, a consulting company, to amount to around $ 100 billion.

The conflict between the two financial centers was peaked out last week when they stopped overlapping Fintech conferences. At her event, officials from Hong Kong announced a public consultation on how small investors could receive adequate access to digital assets as part of a new license regime. The rules are currently limited crypto trades to institutional investors with a portfolio of at least 8 million hk $ ($ 1 million).

"I think [Hong Kong] could still make up for [Leading Global Crypto Hub] Status," said Sam Bankman-Fried, co-founder and CEO from FTX. "It's absolutely not too late for that." FTX left Hong Kong last year due to the city's covid restrictions and more regulatory clarity in the Caribbean on the Bahamas.

In contrast, the Monetary Authority of Singapore proposed to tighten the regulations for small investors after trying to attract some of the biggest names for years. The "crypto loan" at the beginning of this year unveiled a number of companies with connections to Singapore, such as the hedge fund Three Arrows Capital.

Ravi Menon, Managing Director of the Central Bank, said last week in a speech at the FinTech Festival in Singapore that the city state did not want to be a center for trade and speculation in the investment class. MAS has proposed to prohibit small investments in borrowing for investments in cryptocurrencies and to commit cryptopois if potential buyers understand the risks.

The opposite approaches have already caused some to change their plans. "With the latest political announcements we will prioritize and accelerate our business plans in Hong Kong. Before that, we had planned to move our headquarters to Singapore, but now this plan is paused," said Adrian Wang, Chief Executive by Metalpha, a crypto-asset management service provider.

The shift in Hong Kong takes place despite the ban on the crypto trade on the Chinese mainland. "Hong Kong seems to position itself as a much more open jurisdiction for crypto trading compared to Singapore, which is particularly interesting when you consider how hard the mainland has spread," said Zennon Kapron, head of the fintech consulting company Kapronasia.

The city is trying to emphasize that it has a regulatory system separated from the mainland china. "The key element, which is why international investors or people come to Hong Kong, is our international connectivity.

Singapore says that Krypto is still “hugging”, but focuses on institutional markets.

"We take the underlying technologies of Distributed Ledgers and the potential you have to change the financial markets in full," said Lawrence Wong, deputy Prime Minister Singapore when he opened the conference.

Analysts and managers in the industry said that there would be more clarity if the two cities publish the final versions of their plans. "Hong Kong's regime will come into force in March, and Singapore has enough time to publish similar guidelines in the first quarter of the next year," said Vince Turotte, in Hong Kong based Director of Digital Assets at Eventus Systems.

But Hong Kong's unclear in relation to crypto may have already cost it as a hub of the election for companies and managers.

"I do not consider the announcement of Hong Kong to be different than that the entire region wakes up and realizes that 'that is real and will stay here'," said Brooks, Senior Vice President Ripple at a company for cryptocurrencies. "But Singapore has been open in recent years and has taken all the right steps to stay the regional or global headquarters of the election for Fintech and crypto organizations in the long term."