How Hong Kong and Singapore Are Positioning Asia as the Future Hub for Cryptocurrency?
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How Hong Kong and Singapore Are Positioning Asia as the Future Hub for Cryptocurrency?
The next bull market cycle will only arrive when the cryptocurrency industry finds ways to solve real-world problems and achieves mass adoption.
Navigating Web3 tides with focused insightsBy Lily Z.King
Translated by 0xKin TechFlow
About the author: Lily Z. King is Chief Operating Officer at Cobo, a cryptocurrency custody platform based in Singapore.
Recently, both Hong Kong and Singapore have issued policy statements and launched pilot programs demonstrating strong support for cryptocurrency innovation. This has sparked intense discussions about competition between the two financial hubs. However, what's truly exciting is that these centers can complement each other, attract global resources, and position Asia as a leading market for cryptocurrency adoption.
Before regulatory conditions tightened in 2019, Hong Kong was one of the world’s most important cryptocurrency trading centers. At the time, Hong Kong hosted headquarters of influential crypto exchanges such as BitMEX and FTX. Many early adopters within the crypto community still maintain strong emotional ties to Hong Kong, which is why the city government’s renewed enthusiasm for crypto and Web3 innovation has been widely celebrated as “Hong Kong is back.”
Over the past two years, Singapore has greatly benefited from the exodus of Chinese cryptocurrency entrepreneurs due to China’s crackdowns. Despite the bear market, last month’s (October) Token2049 conference in Singapore became one of the best-attended global crypto and Web3 events in recent years. At Token2049, we saw many Chinese teams who recently relocated continuing to actively build products. Meanwhile, traders, investors, and industry leaders flew in from around the world, drawn by their belief in Asia’s market potential. It turns out that even as decoupling occurs elsewhere, Singapore remains a place of convergence.
Regulatory frameworks in Hong Kong and Singapore are still evolving, with detailed policies expected to develop further. But following the FTX saga, we can expect both jurisdictions to strengthen oversight of speculative trading, although differences in their approaches are already emerging.
Singapore has strict measures limiting retail investor access to digital assets. While designed to protect retail investors from speculation, these rules may create inequality of opportunity, placing retail investors at a disadvantage compared to qualified or institutional investors.
In contrast, Hong Kong may be more open to retail investment activities. Its Financial Services and Treasury Bureau stated it will conduct public consultations on retail access, particularly regarding the potential opening of exchange-traded funds (ETFs) for digital assets.
(Note: This article was written in November. On December 13, CSOP Asset Management officially launched two virtual asset ETFs — the CSOP Bitcoin Futures ETF and the CSOP Ether Futures ETF. These ETFs are scheduled to begin trading on the Hong Kong Stock Exchange on December 16.)
The good news is that entrepreneurs and investors in the crypto and Web3 space don’t need to choose between Singapore and Hong Kong. The flow of capital and talent—especially now that Hong Kong has eased its Covid-19 travel restrictions—makes it easy for institutions to operate in both locations and leverage their respective strengths. Competition between Hong Kong and Singapore also means they will push each other to take bolder and faster actions.
Globally, the United States possesses an unrivaled ecosystem of venture capital, tech startups, and deep capital markets. It will continue shaping the foundational technologies, narratives, and even regulations of the crypto and Web3 worlds.
But Singapore and Hong Kong offer something different. For blockchain technology to become the next-generation financial infrastructure, smart contracts running on blockchains must interact with real-world assets. This cannot happen without coordination among a complex network of on-chain and off-chain stakeholders—from protocol builders to government agencies, banks, and stock exchanges.
In the U.S., such coordination is frequently hindered by highly ideological political debates. Ongoing disagreements over whether publishing smart contracts constitutes free speech, whether decentralized finance protocols share the same compliance obligations as traditional financial service providers, or which tokens are securities versus commodities—all contribute to continued regulatory uncertainty.
This is where the pragmatic approaches of Hong Kong and Singapore come into play. While maintaining safeguards against money laundering, terrorism financing, and technological risks, governments in Hong Kong and Singapore efficiently bring together public and private sectors to explore new use cases for crypto technology.
Singapore has just launched an industry pilot for institutional DeFi. The Monetary Authority of Singapore (MAS) has brought together institutions like DBS Bank, JPMorgan, and SBI Digital Asset Holdings to experiment with DeFi applications on public blockchains, including foreign exchange using tokenized yen and Singapore dollars, and trading with tokenized government bonds. Hong Kong has also initiated a pilot project for green bond tokenization.
What Singapore and Hong Kong are doing may seem top-down and centralized, seemingly contradicting the permissionless ethos of the crypto movement. Yet, by tokenizing real-world assets, they give institutions and individuals compelling reasons to use digital assets, effectively accelerating mainstream adoption of crypto technology. With greater mainstream adoption, grassroots startups will also gain larger markets for their bottom-up innovations.
Singapore and Hong Kong also have another key resource at their disposal—the tech entrepreneurs and talent from mainland China. In the Web 2.0 era, Chinese internet companies created products capable of competing with top U.S. firms in scale and innovative features. Much of this technological expertise will continue to play a role in the crypto and Web3 economy.
Indeed, major Chinese Web2 giants listed on the Hong Kong Stock Exchange—such as Tencent, Alibaba, Bilibili, and Baidu—have been testing or investing in crypto-related technologies in various forms, yet lacked a market where they could boldly experiment. Now, Hong Kong may be exactly the breeding ground they need.
Some may question whether Hong Kong can develop crypto and Web3 policies fundamentally different from those of mainland China. However, due to geopolitical tensions and the pandemic, China faces real risks of isolation and needs Hong Kong more than ever as a global gateway and a frontline player in global finance.
Meanwhile, Singapore continues attracting many Chinese tech companies seeking a gateway to global markets.
Looking across the broader Asian market, vast populations still lack access to convenient financial services or stable investment opportunities. Financial institutions in Hong Kong and Singapore both have extensive regional influence, positioning them well to leverage crypto technology to enhance financial inclusion across the region.
Unfortunately, the previous bull cycle in crypto was largely driven by speculation. The rise and fall of FTX, Three Arrows Capital, and Terra (LUNA) remind us that speculation and hollow narratives cannot secure a real future for crypto technology.
The next bull cycle will only arrive when the crypto industry finds ways to solve real-world problems and achieves mass adoption. For crypto entrepreneurs, Asia presents a perfect market—not just for innovating with on-chain tokens, but also with real-world assets, serving not only investors but also everyday users. Hong Kong and Singapore aren’t fighting over a fixed pie; both will play significant roles in the next growth phase of Asia’s digital economy.
Now is the best opportunity: Asia’s two major hubs—Hong Kong and Singapore—are effectively combining public and private resources to deliver the most economically impactful use cases for crypto technology and narratives.
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