According to industry analysts, Asia is encouraging crypto clarity in the face of regulatory uncertainty in the United States, which may make the region more appealing to investors.
“In Asia, cryptocurrency regulations have moved faster and with more clarity — green light or red light — than in the United States,” said Ben Charoenwong, assistant professor of finance at the National University of Singapore Business School.
“As a result, Asia has become the premier location for much of the fintech innovation,” said Charoenwong.
Hong Kong formally introduced crypto trading to regular investors earlier this month and upgraded the licenses of two exchanges. HashKey and OSL are now able to grow their company beyond professional investors and into retail investors.
“It shows that virtual assets are becoming a recognized asset class with a similar regulatory status as traditional asset classes,” said Lennix Lai, global chief business officer at crypto exchange OKX.
“This will boost investor confidence even further, making Hong Kong more appealing as a potential global virtual asset hub,” added Lai. OKX has applied for a Hong Kong virtual asset trading license.
Potential Financial Technology Breakthrough
Hong Kong stated last year that it acknowledges “the potential of distributed ledger technologies and Web 3.0 to become the future of finance and commerce” and expects effective regulation to improve efficiency and transparency.
Regional financial hub competitor Singapore has also been a pioneer in cryptocurrency legislation. The Singapore Monetary Authority gave Blockchain.com a license in August, an upgrade from the in-principle clearance it received in October. Ripple, another player, gained preliminary permission in June. This means that Blockchain.com and Ripple will be able to offer regulated cryptocurrency services in Singapore.
Meanwhile, Thailand and Indonesia have prohibited the use of cryptocurrency as a payment method but allow it to be traded as a commodity.
Coinbase and Ripple, on the other hand, are entangled in disputes with the Securities and Exchange Commission, which has accused them of violating securities laws. In response to the SEC’s crackdown, Coinbase and Ripple, as well as other crypto businesses, have threatened to depart the United States.
U.S. Crypto Turmoil
To be true, the industry has been rife with scandal and high drama in the last year. FTX declared bankruptcy in November, while Terraform and its CEO Do Kwon were accused with defrauding investors in February.
Bitcoin is now trading about $28,373, a long way from its all-time high of more than $65,000 in 2021.
Crypto leaders have lambasted the United States and its regulatory stance, notably for a lack of transparency.
The SEC charged Ripple and its co-founders with violating securities laws in 2020 after they sold their native cryptocurrency XRP without first registering it with the SEC. However, in July, a landmark decision concluded that the token was not, in and of itself, a security.
Meanwhile, the SEC charged Coinbase with running an unregistered exchange and broker in June. Binance was charged with various securities law offenses the following month.
“I believe it is fair to say that the United States has made it as difficult as possible for the crypto industry to understand the rules of the road.” In a May interview with CNBC, Ripple CEO Brad Garlinghouse noted, “The SEC has really been at the forefront of that confusion.” As a result, he believes that some crypto companies may relocate to more progressive nations.
Asia’s Regulatory Clarity
Singapore and Hong Kong provide significantly more operational certainty for many industry players throughout the Pacific.
“In the Asia Pacific region, Singapore has the first mover advantage, including being ahead of Hong Kong.” “There were no other countries that were so far ahead in terms of having a fairly advanced licensing regime,” Janice Goh, partner at Cavenagh Law.
Singapore’s Payment Services Act, which governs payment services and the provision of crypto services to the general public, went into force in January 2020.
“Whereas in Hong Kong, it had the opportunity and hindsight to go through the crypto winter and look at what other regulators have done to enhance and roll out its regime,” Goh explained.
Singapore has increased oversight of cryptocurrency enterprises. It required businesses to place client assets in a statutory trust before the end of the year. The MAS also prohibits enterprises from enabling lending or staking the assets of their retail consumers.
On Tuesday, the city-state proposed guidelines for stablecoins, a sort of digital currency, becoming one of the world’s first to do so.
In November, MAS managing director Ravi Menon stated unequivocally that Singapore wants to be a hub for digital assets, not one for cryptocurrency speculation.
“Hong Kong and Singapore are both similar in terms of their approach to maintaining very high regulatory standards, as well as being very proactive in creating an enabling environment for digital asset businesses,” said Ong Chengyi, APAC policy head at blockchain analytics firm Chainalysis.
Ong anticipates that Hong Kong will award more licenses and that more crypto enterprises will relocate to Asia.
Gemini said in June that it will boost its staff in Singapore and make the city-state its regional headquarters, joining Coinbase and Ripple in growing their Asia operations.
Please note that this article does not offer any instructions or suggestions regarding investment decisions. It is important for you to conduct your own research or seek professional advice from a qualified professional before conducting an investment decision.