Hong Kong lures data provider Kaiko in its effort to build crypto hub

by Arthur · March 16, 2023

(Bloomberg) — Cryptocurrency market data provider Kaiko plans to move its Asian headquarters to Hong Kong from Singapore, drawn by the city’s push to establish a global hub for the digital asset industry.

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Hong Kong’s pro-crypto political pivot and the emergence of Covid-related curbs contributed to the Paris-based company’s decision, CEO Ambre Soubiran said in an interview on Thursday. Kaiko feeds data to the likes of Deutsche Boerse and ICE Global Network.

“With all the recent changes and initiatives from Hong Kong’s regulatory bodies, we realized that this is clearly where we need to be, where capital is going to flow in, and where we see a lot of attractiveness in terms of hedge funds, investors and asset managers,” Soubiran said.

Hong Kong is trying to develop crypto regulations that will encourage growth and protect investors, trying to learn lessons from bankruptcies like the FTX exchange as it positions itself for a rebound from a $2 trillion market rout.

The city plans to allow retail investors to trade larger tokens such as Bitcoin and Ether later this year. A mandatory licensing regime for stablecoins – a type of crypto token intended to hold a constant value – is due by 2023-2024.

The development in Hong Kong contrasts with a fluctuating crackdown on crypto in the US, where digital asset companies are also increasingly cut off from the traditional banking sector after a trio of lenders collapsed. Singapore, meanwhile, has proposed tighter rules in the wake of the FTX rash.

Hong Kong’s “regulatory landscape is changing positively,” Soubiran said. She added that she wants to “make sure that we can support that institutionalization and that kind of growth and establishment of the asset class in Hong Kong.”

Challenges

A major challenge for Hong Kong is that the virtual asset industry remains in a deep slump after a bubble in token prices collapsed last year and investors fled. Exchanges Coinbase Global Inc., Crypto.com and Huobi are among a number of firms that have cut thousands of jobs in recent months.

Other companies are in a holding pattern as they await a crypto recovery and the final version of Hong Kong’s revamped digital asset rules before deciding whether to commit to scarce investment funds.

Kaiko said Asia-Pacific chief Sean Lawrence will move from Singapore by the end of March. Figuratively, “something like nine out of 10 people” in crypto are discussing returning to Hong Kong in some way, Lawrence said in an interview.

A new Hong Kong licensing regime for crypto exchanges is coming on June 1. The pivot to promoting the digital asset sector is part of a larger effort to restore Hong Kong’s credentials as a cutting-edge financial center after Covid-related curbs and political unrest sparked a brain drain.

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