High-rise buildings are seen near Victoria Harbour in Hong Kong, China, July 24, 2023. (Photo by Costfoto/NurPhoto via Getty Images)
Costfoto | Nurphoto | Getty Images
Asia is taking the lead in promoting regulatory clarity in the cryptocurrency industry, surpassing the United States and making the region more appealing to investors. Industry experts suggest that Asia’s clear and decisive stance on cryptocurrency regulations has positioned it as the premier destination for fintech innovation.
Ben Charoenwong, assistant professor of finance at the National University of Singapore Business School, states, “Cryptocurrency regulations in Asia have been more efficient and transparent compared to the U.S., providing a green light or red light without ambiguity.”
Hong Kong, for example, recently opened up crypto trading to retail investors and granted upgraded licenses to two exchanges, HashKey and OSL. This move signifies the recognition of virtual assets as a legitimate asset class, upholding similar regulatory standards as traditional assets.
Lennix Lai, global chief commercial officer at crypto exchange OKX, believes that these developments will enhance investor confidence and establish Hong Kong as a potential global virtual asset hub. OKX is currently in the process of applying for a virtual assets trading license in Hong Kong.
“Hong Kong and Singapore both prioritize maintaining high regulatory standards, making them attractive choices for crypto businesses.”
Ong Chengyi
Head of APAC policy, Chainalysis
In contrast, cryptocurrency giants Coinbase and Ripple are currently facing lawsuits filed by the U.S. Securities and Exchange Commission (SEC), accusing them of violating securities laws. The uncertainty and lack of regulatory clarity in the U.S. have prompted these firms, along with others in the industry, to consider relocating to more crypto-friendly jurisdictions.
The Turmoil in the U.S.
The cryptocurrency sector has been marred by scandal and controversy over the past year. FTX filed for bankruptcy, while Terraform and its CEO Do Kwon faced charges of defrauding investors. Bitcoin’s price has also plummeted to around $28,373, significantly lower than its all-time high in 2021.
Industry leaders have criticized the U.S. for its murky regulation approach and lack of clarity. The SEC’s accusations against Ripple and Coinbase for operating unregistered exchanges have further fueled the confusion and uncertainty surrounding the industry. Ripple CEO Brad Garlinghouse expressed his concern and suggested that some cryptocurrency firms may seek more progressive jurisdictions outside of the U.S.
Asia’s Regulatory Clarity
In contrast, Singapore and Hong Kong have established clearer and more favorable regulatory frameworks for the cryptocurrency industry, positioning themselves as leaders in the region.
Janice Goh, partner at Cavenagh Law, emphasizes Singapore’s advantage as a front-runner in the Asia Pacific region, with an advanced licensing regime. Ong Chengyi, head of APAC policy at blockchain analytics firm Chainalysis, highlights the similar regulatory standards and proactive approach to digital asset business in both Hong Kong and Singapore. It is expected that more licenses will be issued in Hong Kong, attracting an influx of cryptocurrency firms to the region.
Major players in the industry, including Gemini, Coinbase, and Ripple, have expressed their commitment to expanding operations in Singapore, recognizing its potential as a regional hub for digital assets.
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