As the global crypto market gains momentum, Hong Kong and Singapore are emerging as the frontrunners in Asia’s push to establish themselves as major digital asset hubs. With Bitcoin recently nearing $110,000, governments worldwide are seeking to tap into the renewed enthusiasm for crypto.
Hong Kong’s Approach: Attracting Liquidity and Expanding Offerings
Hong Kong regulators have made it clear that liquidity is key to strengthening the city’s position in the global crypto market. Officials are exploring ways to attract institutional and retail investors, including introducing riskier crypto products like derivatives and margin financing.
📌 Hong Kong’s Centralized Exchanges Surge: In the first half of 2024, centralized exchanges in the city received $26.6 billion—almost triple the previous year and nearly double Singapore’s $13.5 billion.
📌 New Regulations on the Horizon: The Securities and Futures Commission (SFC) is considering expanded rules for custody services, staking, and over-the-counter (OTC) trading, aiming to create a robust but business-friendly regulatory environment.
📌 China’s Crypto Ban, But Hong Kong’s Blessing? While mainland China has maintained its ban on crypto since 2021, Hong Kong continues to play a key role as China’s financial gateway, with many industry insiders believing the city’s pro-crypto stance aligns with Beijing’s broader financial strategy.
Singapore’s Early Lead in Digital Asset Regulation
Singapore has been one step ahead in establishing a regulated framework for digital assets, issuing 30 Major Payment Institution licenses to firms dealing in digital tokens. The Monetary Authority of Singapore (MAS) has actively engaged with global financial institutions to explore asset tokenization through initiatives like Project Guardian.
📌 Project Guardian’s Impact: This initiative, launched in 2022, brought together regulators and major banks to explore blockchain-based financial instruments, solidifying Singapore’s reputation as a leader in regulated crypto innovation.
📌 Regulatory Balance: Unlike Hong Kong’s approach of expanding financial products, Singapore has focused on early and clear regulation, ensuring businesses operate within a stable and predictable legal framework.
Challenges and Competition in the Region
While both cities are racing ahead, they also face challenges:
Hong Kong’s strict licensing process has led to eight pending applicants and 13 withdrawals, as companies struggle to meet compliance requirements.
Singapore’s licensing process, while structured, limits riskier products, which may slow institutional inflows compared to Hong Kong’s aggressive push for global liquidity.
Dubai is emerging as a major competitor, attracting businesses with its pro-business policies and tax incentives.
