In 2024, Singapore is advancing its initiatives to establish a digital assets hub, contrasting sharply with the challenges faced by rival financial center Hong Kong, which has encountered difficulties gaining momentum.
In 2024 Singapore issued 13 cryptocurrency licenses to operators, including prominent exchanges such as OKX and Upbit, alongside major global players like Anchorage, BitGo, and GSR. The number of licenses awarded by the city-state has more than doubled compared to the previous year. The licensing regime in Hong Kong has experienced sluggish advancement.
Two cities compete to attract digital-asset companies by offering specialized frameworks, tokenization initiatives, and regulatory sandboxes. Local authorities recognize cryptocurrency’s potential to enhance their regions’ appeal as global business centers; however, advancements in this area have been inconsistent.
Angela Ang, senior policy adviser at consultancy TRM Labs, stated, “Hong Kong’s regulatory regime for exchanges is more restrictive in several significant aspects, including the custody of customer assets and the policies governing token listing and delisting.” “This development could have shifted the scales in favor of Singapore.”
In Hong Kong, the pace of approvals has lagged behind expectations, with regulators indicating a desire to permit additional exchanges by the end of the year. The city has officially licensed seven platforms, with four receiving conditional approval on December 18. Additionally, seven others possess provisional permits. Major cryptocurrency exchanges, including OKX and Bybit, have withdrawn their license applications in Hong Kong.
The city permits trading exclusively in the most liquid cryptocurrencies, including Bitcoin and Ether, effectively restricting investors from speculating on smaller, more volatile tokens commonly referred to as altcoins.
“Meeting a high standard while remaining profitable is quite a challenge,” remarked Roger Li, co-founder of One Satoshi, a network of stores in Hong Kong that facilitates over-the-counter exchanges between cash and cryptocurrency.
Digital asset executives considering expansion in Asia must consider China’s significant influence, a country where crypto trading remains prohibited. David Rogers, regional chief executive at market maker B2C2 Ltd., noted that Hong Kong’s special administrative regime presents a distinct risk profile compared to other countries. The firm has also applied for a license in Singapore.
According to Rogers, Singapore’s favorable digital-asset landscape positions it as a “safe, long-term choice” for serving as a regional hub. “We are adopting a strategy that considers risk factors.”
Both cities are making strides in encouraging regulated financial institutions to explore blockchain technology on the wholesale front.
In November, the Monetary Authority of Singapore unveiled its plans to bolster the commercialization of asset tokenization via two state-backed initiatives: Project Guardian and Global Layer 1. Hong Kong has successfully facilitated issuing HK$6 billion ($770 million) in digital green bonds, utilizing the tokenization platform provided by HSBC Holdings Plc.
In April, Hong Kong introduced spot Bitcoin and Ether ETFs; however, these offerings have not generated the same excitement among investors as their counterparts in the United States. In a notable development, the city’s Bitcoin and Ether ETFs have gathered approximately $500 million, representing only a tiny portion of the over $120 billion managed by issuers across the United States.
“The framework in Singapore fosters engagement between newcomers and established institutions,” stated Ben Charoenwong, an associate professor of finance at INSEAD. Hong Kong’s emphasis on established financial institutions is said to “create fewer opportunities for new entrants and limit the scope of innovation.”