Singapore surpasses Hong Kong to become Asia’s crypto hub by 2024

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In the development of Asia’s digital assets industry in 2024, Singapore is cementing its dominance as the leading hub, while Hong Kong is still struggling to find momentum. The competition between these two cities in attracting global digital asset businesses shows an interesting dynamic, with significantly different results.

Singapore has proven its seriousness in developing the digital asset ecosystem through the issuance of 13 licenses to leading operators. This marks a more than two-fold increase over the previous year, with licensees including big names such as OKX, Upbit, Anchorage, BitGo, and GSR. This success is attributed to a more flexible and progressive regulatory approach, as expressed by Angela Ang, Senior Policy Analyst at TRM Labs.

Hong Kong’s Regulatory Challenges

In contrast to Singapore’s achievements, Hong Kong has only managed to issue seven official licenses, with four of them only approved on December 18 with various restrictions. Stricter policies, including trading restrictions for Bitcoin and Ether only, have prompted some major players such as OKX and Bybit to withdraw their license applications.

Geopolitical factors and regulatory stability play an important role in this dynamic. Hong Kong’s proximity to China, which has banned cryptocurrency trading, creates a different perception of risk compared to other countries. David Rogers, Regional Chief Executive of B2C2 Ltd. emphasized that Singapore offers more promising long-term stability for industry players.

Innovation and Ecosystem Development

Singapore’s advantage is further strengthened by innovative initiatives such as Project Guardian and Global Layer 1, which aim to accelerate the commercialization of asset tokenization. These programs have successfully engaged global financial institutions and created a more dynamic ecosystem.

Meanwhile, Hong Kong’s efforts to catch up through the launch of HK$6 billion worth of digital green bonds and Bitcoin and Ether ETFs have not yielded the expected results. Hong Kong’s crypto ETFs have only raised around US$500 million, far behind the US$120 billion raised by similar products in the US market.

Ben Charoenwong, professor of finance at INSEAD, underlines the fundamental differences in the two cities’ approaches. Singapore’s framework of encouraging interaction between new players and established institutions has created an environment conducive to innovation. In contrast, Hong Kong’s focus on traditional financial institutions limits the space for new players and stifles the development of innovation in the sector.

Future Outlook

This difference in approach reflects different philosophies in the development of the digital asset industry. Singapore chooses a middle ground that balances innovation with risk management, while Hong Kong tends to be more conservative with an emphasis on stability and tighter controls.

Going forward, this competition is expected to intensify as the global digital asset industry grows. However, Singapore’s success in building a strong foundation and inclusive ecosystem provides a significant competitive advantage in its efforts to maintain its position as Asia’s leading digital assets hub.