A Bloomberg report recently highlighted that Singapore has strengthened its position as a top digital asset hub in Asia, outpacing Hong Kong in terms of “regulatory efficiency and appeal” to cryptocurrency firms by 2024.
This year alone, Singapore issued 13 crypto licenses, more than doubling the number granted in 2023. Major global players like OKX, Upbit, Anchorage, BitGo, and GSR have received regulatory approval, showcasing Singapore’s increasing allure for digital asset companies.
On the other hand, Hong Kong appears to be experiencing a slower pace under its licensing regime. To date, only seven platforms have secured full licenses, while others are operating under provisional permits.
### How Regulatory Variations Influence Regional Competition
Industry experts suggest that Hong Kong’s regulatory constraints are a key factor in its lagging position. Strict rules regarding the custody of customer assets, along with rigorous policies for token listing and delisting, pose significant challenges for exchanges aiming to operate profitably in the region.
Furthermore, trading in Hong Kong is limited to high-liquidity cryptocurrencies such as Bitcoin and Ethereum, curbing altcoin investment opportunities. This conservative strategy has led exchanges like OKX and Bybit to pull back their licensing applications in Hong Kong, and instead, shift their attention to Singapore.
Angela Ang, a senior policy adviser at TRM Labs, pointed out:
>”Hong Kong’s regulatory regime for exchanges is more restrictive in several important ways, such as the custody of customer assets and token listing policies. This might have tipped the balance in favor of Singapore.”
### Different Paths in Crypto Innovation
The regulatory framework in Singapore has been acknowledged for its balanced approach, encouraging collaboration between newcomers and established financial entities.
Bloomberg notes efforts like Project Guardian and Global Layer 1, supported by the Monetary Authority of Singapore, as initiatives designed to speed up asset tokenization and expand blockchain use in wholesale finance markets.
These initiatives have paved the way for Singapore to become a stable, long-term option for companies planning to establish a regional base for their digital asset operations.
While Hong Kong has achieved notable successes, such as issuing HK$6 billion ($770 million) in tokenized green bonds and launching Bitcoin and Ethereum spot ETFs, progress has been somewhat delayed.
The assets under management for these ETFs in Hong Kong are about $500 million—considerably less than the $120 billion held by similar products in the U.S.
Experts indicate that Hong Kong’s focus on well-established financial institutions offers limited opportunities for innovative startups, which could slow the momentum of its digital asset sector. As Roger Li, co-founder of One Satoshi, explained:
>”It’s quite a high standard to meet and be profitable.”
Featured image by DALL-E, Chart sourced from TradingView.
