Singapore forged ahead with efforts to formulate a digital-assets hub in 2024, while rival financial center Hong Kong has struggled to gain traction.
Singapore doled out 13 crypto licenses in 2024 to a range of crypto operators including top exchanges OKX and Upbit, as well as global heavyweights Anchorage, BitGo and GSR. That’s more than double the licenses awarded by the city-state the previous year. A similar licensing regime in Hong Kong has been slow to progress.
Both cities are bidding to entice digital-asset firms to their shores with dedicated regimes, tokenization projects and regulatory sandboxes. Local authorities see in crypto the potential to boost the allure of their respective jurisdictions as global business hubs, but progress has been uneven.
“Hong Kong’s regulatory regime for exchanges is more restrictive in a number of ways that matter — such as custody of customer assets and token listing and delisting policies,” said Angela Ang, senior policy adviser at consultancy TRM Labs. “This may have tipped the balance in Singapore’s favor.”
Approvals in Hong Kong have come slower than expected and regulators had signaled their intent to authorize more exchanges by year-end. The city has now fully licensed seven platforms in total, with four of those given the green light — with some restrictions — on Dec. 18. A further seven hold provisional permits. Prominent exchanges such as OKX and Bybit withdrew their applications for Hong Kong licenses.
Read more: Hong Kong Pledges More Licenses for Crypto Exchanges by Year-End
The city allows trading in only the most liquid cryptocurrencies such as Bitcoin and Ether, barring investors from punting on smaller and more volatile tokens, known as altcoins.
“It’s quite a high standard to meet and be profitable,” said Roger Li, co-founder of One Satoshi, a chain of stores in Hong Kong offering over-the-counter conversions between cash and crypto.
Another factor for digital-asset executives mulling expansion in Asia is the influence of China, where crypto trading is banned. Hong Kong’s special administrative regime has a different risk profile compared to other countries, said David Rogers, regional chief executive at market maker B2C2 Ltd., which has applied for a license in Singapore.
Singapore’s supportive digital-asset environment makes it a “safe, long-term choice” for a regional hub, Rogers said. “It is a risk-adjusted approach we’re taking here.”
On the wholesale side, both cities can point to progress getting regulated financial institutions to experiment with blockchain software.
The Monetary Authority of Singapore in November announced plans to support the commercialization of asset tokenization through Project Guardian and Global Layer 1, two state-backed initiatives. Hong Kong oversaw the sale of HK$6 billion ($770 million) of digital green bonds using HSBC Holdings Plc’s tokenization platform.
Hong Kong also notably rolled out spot-Bitcoin and Ether ETFs in April, but they have failed to stoke the kind of enthusiasm displayed by buyers of equivalent products in the US. The city’s Bitcoin and Ether ETFs combined have amassed about $500 million, a fraction of the more than $120 billion held by US issuers.
“Singapore’s framework encourages interaction between new entrants and established institutions,” said Ben Charoenwong, associate professor of finance at INSEAD. Hong Kong’s focus on established financial institutions “creates fewer opportunities for new entrants and limits the scope of innovation.”
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