Hong Kong Plans to Regain Crypto Lead in Southeast Asia

Despite the challenges posed by markets and competitors, Hong Kong is determined to become a global cryptocurrency hub.

Hong Kong officially Published At its Fintech Week late last year, its new approach to cryptocurrencies highlighted Web3 integration. After a while, the authorities gave permission list Hong Kong’s first crypto-based exchange-traded funds have since raised over $80 million.

Later, Securities of Hong Kong and futures brokerage declared Retail investors can trade “highly liquid” digital assets. This development, as well as the mandatory transfer licensing regime, is expected from June this year. Officials also plan to consult on which properties to allow retail investors this quarter.

Officials have expressed interest in reviewing property rights for tokenized assets and the legality behind the implementation of smart contracts. Yet, despite these efforts, Hong Kong still has its work cut out for it in achieving its crypto ambitions.

Hong Kong returns to form

These are ambitions The digital asset marks a return to form, as Hong Kong served as a crypto hub in its earlier years. Sam Bankman-Fried’s FTX and Alameda Research have roots in the city Finance One maintained a site there. However, due to increasing regulations and restrictions, many companies eventually decided to leave.

Initially, authorities decided to significantly raise regulatory standards, restricting access to crypto exchanges to those with portfolios of at least HK$8 million ($1 million). Once China broadly bans crypto in 2021, the city also loses its appeal as an outlet for the mainland. oppression Corona virus Policies instituted by an increasingly authoritarian Beijing have led to a significant brain drain from the city.

However, the fear of greater Chinese intrusion is one of the challenges Hong Kong currently faces. Transaction volume in Hong Kong expanded less than 10% in the 12 months to June as digital asset prices fell last year. It also faces constant competition from nearby Singapore.

and the Hong Kong Monetary Authority (HKMA). declared It will seek a compulsory license on Tuesday stablecoin Issuers and algorithmic stablecoins will be completely banned.

“The value of the reserve assets of a stablecoin arrangement must at all times meet the value of the stablecoins outstanding,” the HKMA statement said.

“Reserved assets must be of high quality and highly liquid. Stablecoins that derive their value based on arbitrage or algorithms will not be accepted.

Singapore competition

Long a competitive financial hub in Southeast Asia, Singapore is also vying to become a global cryptocurrency hub. When Hong Kong announced its crypto plans at its fintech week last year, Singapore held its own on overlapping dates. and the Monetary Authority of Singapore (MAS). introduced Crypto regulatory proposals late last year.

A company’s current conundrum makes clear the challenge posed by the choice between two options. Singapore-based crypto lender Matrixport Technologies is currently awaiting the outcome of its virtual asset license application. However, based on the developments it observes in Hong Kong, it may decide to move there before its application is resolved.