Against the backdrop of regulatory uncertainty in the U.S., Asia is fostering crypto clarity, which could make the region more attractive to investors, according to industry observers.
“Cryptocurrency regulations in Asia have moved along faster and with more clarity — green light or red light — than in the U.S.”
“This has made Asia the premiere location for much of fintech innovation”
Ben Charoenwong, assistant professor in finance at the National University of Singapore Business School.
Hong Kong opened crypto trading to retail investors and upgraded the licenses of two exchanges earlier this month. HashKey and OSL can now expand their operation to include retail investors in addition to professional investors.
Competing regional financial center Singapore has been a leader in cryptocurrency regulation. In August, the Monetary Authority of Singapore granted Blockchain.com a license, an upgrade from its October approval in principle. In June, Ripple received approval in principle from another player. This implies Blockchain.com and Ripple can offer regulated cryptocurrency services in Singapore.
In the meantime, Thailand and Indonesia have prohibited the use of cryptocurrencies as a form of payment, but allow them to be traded as commodities.
In contrast, Coinbase and Ripple are embroiled in litigation with the U.S. Securities and Exchange Commission over alleged violations of securities laws. As a result of the SEC’s crackdown, Coinbase, Ripple, and other crypto firms have threatened to flee the United States.
Concerns in the U.S.
Certainly, the industry has been plagued by scandal and high drama in the past year. FTX filed for bankruptcy in November, while Terraform and its CEO Do Kwon were charged with investor fraud in February.
Bitcoin is currently trading near $28,373, which is considerably lower than its all-time high of over $65,000 in 2021.
The U.S. and its regulatory approach have been criticized by crypto leaders, particularly for its lack of clarity.
In 2020, the SEC accused Ripple and its co-founders of violating securities laws by selling XRP without first registering it. In July, however, a landmark decision determined that the token was not necessarily a security.
In June, the SEC filed a lawsuit against Coinbase, alleging that it operated an unregistered exchange and broker. In the same month, Binance was accused with multiple violations of securities laws.
Regulatory clarity in Asia
Across the Pacific, Singapore and Hong Kong provide significantly greater operational clarity to numerous industry participants.
In January 2020, Singapore’s Payment Services Act went into effect, establishing a regulatory framework for payment services and the provision of crypto services to the public. Hong Kong, on the other hand, had the opportunity and hindsight to experience the crypto winter and examine what other regulators have done to improve and implement their regimes.
Singapore has increased its oversight of cryptocurrency firms. It required businesses to place consumer assets in a statutory trust by the end of the year. MAS also prohibits firms from facilitating lending or staking on the assets of their retail consumers.
On Tuesday, the city-state became one of the first nations in the world to propose regulations for stablecoins, a form of digital currency.
In November, Ravi Menon, the managing director of the MAS, made it clear that Singapore aspires to be a center for digital assets, but not for cryptocurrency speculation.
Hong Kong and Singapore are both similar in terms of the approach to maintaining very high regulatory standards, as well as being very proactive in creating an enabling environment for digital asset businesses.
Ong Chengyi, head of APAC policy at blockchain analytics firm Chainalysis.
Ong anticipates that Hong Kong will issue more licenses and that more crypto firms will migrate to Asia.
In June, Gemini announced that Singapore will serve as its regional center, joining Coinbase and Ripple in expanding their Asian operations.
