Hong Kong, Singapore See Divergent Approaches to Retail Crypto Trading

Hong Kong plans to move to a friendlier approach to cryptocurrencies starting next year, according to a Bloomberg report, while neighboring Singapore plans to impose new restrictions on consumers.

People familiar with the matter, who asked to remain anonymous, told Bloomberg that the information is not yet public. but Hong Kong has a planned compulsory licensing program for crypto platforms set to be enforced in March next year, which will allow retail trading.

They added that further details and program schedule are yet to be decided as public consultation must be done first.

Hong Kong does not plan to support specific coins such as Bitcoin or Ether. However, regulators plan to allow listings of larger tokens and legalize crypto trading for retail clients, according to Bloomberg.

This move indicates a positive regulatory move for cryptocurrencies, which contrasts with the city’s skeptical stance in recent years.

The city plans to reveal more about the details of its recently stated goal of creating a top crypto hub next week during the annual Fintech Week conference, which starts on Monday.

Hong Kong is shifting to a friendlier approach to crypto as the city aims to regain its credentials as one of the top financial centers after recent years of political instability and the COVID-19 pandemic led to an outward migration of talent.

People familiar with the matter added that crypto regulators are likely to require criteria for listing tokens on retail exchanges, such as a company’s market capitalization, liquidity and membership in third-party crypto-indices.

While other economies are beginning to open up to cryptocurrencies, Singapore has said it is unwilling to change its regulations. Instead, it strengthens the restrictions on crypto trading.

The Monetary Authority of Singapore (MAS) on Wednesday unveiled a proposal to limit retail participation in digital assets. After this, small investors will be prohibited from financing coin purchases through borrowing.

Singapore’s central bank governor Ravi Menon told Bloomberg that the city-state will not stand in the way of other financial centers that want to pull crypto trading away with more relaxed rules.

“We don’t set out to compete with other jurisdictions, especially on regulation,” said Menon, chief executive of MAS. “We have to do what is right for us, what is necessary to limit the risk. And the risk primarily hurts private investors.”

Singapore’s central bank echoed sentiments similar to MAS’s in asking companies to stop using tokens deposited by retail investors for lending or efforts to generate returns. However, the restrictions proposed by the two regulatory bodies will not apply to high net worth investors.

These steps are being taken in Singapore to ensure positive growth of the crypto industry with security measures that will provide security to investors.

According to the Bloomberg report, Menon said Singapore still wants to be a crypto hub, but one that promotes areas of digital assets with “use cases” and tokenization – the process of using blockchain technology to secure various assets.

“We accept that cryptocurrencies have a place in the larger digital ecosystem because they are tokens that are native to the blockchain that powers a lot of this activity,” he said. “They must have an expression in the formal financial sector.”

Meanwhile, other economies in Asia, such as neighboring Japan, have already started to take a positive stance on crypto. The country has already started opening up its economy to crypto by making it easier for companies to list tokens, which is in contrast to its previous conservative stance that was partly to blame for driving away crypto startups.

In early October, Japanese Prime Minister Fumio Kishida announced that the government will take an active role in promoting Web3 services.

Kishida said Web3-related growth – including metaverse and NFT-related developments – is now part of the country’s growth strategy. He added that the government is keen to create a society where new services can be easily created.

On October 3, the Prime Minister gave a speech before Japan’s National Diet (Japan’s bicameral parliament) where he said that the government’s investment in the country’s digital transformation already includes issuing NFTs to local governments that use digital technology to solve challenges in their respective jurisdictions.

While in August, the Japanese government proposed a business-friendly crypto tax to take effect in 2023. The prime minister’s plan to revamp the economy relies on stimulating growth in Web3 firms as a key agenda.

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