Buildings in Singapore, Tuesday, May 14, 2024. Singapore's new Prime Minister Lawrence Wong chose Trade Minister Gan Kim Yong as his deputy, leaving outgoing Prime Minister Lee Hsien Loong's cabinet largely intact. Photographer: Lauryn Ishak/Bloomberg
Singapore forged ahead in its efforts to build a digital-assets hub in 2024, while rival financial center Hong Kong struggles to gain traction.
Singapore granted 13 crypto licenses to various crypto operators in 2024, including top exchanges OKX and Upbit, as well as global heavyweights Anchorage, BitGo and GSR. That’s more than double the number of licenses the city-state granted last year. A similar licensing regime in Hong Kong has been slow to move forward.
Both cities are bidding to attract digital-asset companies to their shores with dedicated governance, tokenization projects and regulatory sandboxes. Local authorities see potential in crypto to boost their respective jurisdictions’ attractiveness as global business hubs, but progress has been uneven.
“Hong Kong’s regulatory regime is important for exchanges in many ways – such as the custody of customer assets and token listing and delisting policies,” said Angela Ang, senior policy advisor at consultancy TRM Labs. “This may have tipped the balance in Singapore’s favor.”
Approvals in Hong Kong have been slower than expected, and regulators have signaled their intention to authorize more exchanges by the end of the year. A total of seven platforms in the city have now been granted full licenses, four of which were given the green light – with some restrictions – on December 18. A further seven platforms hold provisional permits. Leading exchanges such as OKX and Bybit have withdrawn their applications for Hong Kong licenses.
Read more: Hong Kong vows to issue more crypto exchange licenses by year-end
The city only allows trading in the most liquid cryptocurrencies, such as bitcoin and ether, which prevents investors from trusting smaller and more volatile tokens, known as altcoins.
“It’s a very high standard to complete and be profitable,” said Roger Lee, co-founder of a chain of stores in Hong Kong that offers over-the-counter conversions between cash and crypto.
Another factor for digital-asset executives looking to expand into Asia is the influence of China, where crypto trading is banned. David Rogers, regional chief executive of market maker B2C2 Ltd., said the Hong Kong special administrative region has a different risk profile than other countries, which have applied for licenses in Singapore.
Singapore’s supportive digital-asset environment makes it a “safe, long-term choice” for a regional hub, Rogers said. “It’s a risk-adjusted approach that we’re taking here.”
On the wholesale side, both cities may point to progress in getting regulated financial institutions to experiment with blockchain software.
The Monetary Authority of Singapore announced plans in November to support the commercialization of asset tokenization through two state-backed initiatives, Project Guardian and Global Layer 1. Hong Kong oversaw the sale of a HK$6 billion ($770 million) digital green bond using HSBC Holdings Plc’s tokenization platform.
Hong Kong also introduced spot-bitcoin and ether ETFs in April, but they have failed to spark the enthusiasm shown by buyers of equivalent products in the U.S. The city’s bitcoin and ether ETFs have collectively raised about $500 million, part of the more than $120 billion held by U.S. issuers.
“Singapore’s structure encourages interaction between new entrants and established institutions,” said Ben Charonwong, associate professor of finance at INSEAD. Hong Kong’s focus on established financial institutions “creates fewer opportunities for new entrants and limits the scope for innovation.”
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