Hong Kong paves the way to become Asia's top crypto hub
Hong Kong has been determined to become the leading crypto hub in Asia.
The backstory: After the recent FTX collapse, the crypto dominoes fell. Other companies followed suit and defaulted, including BlockFi, Voyager, Genesis Global and more, leaving creditors owed billions of dollars. Falling token prices, waning investor trust and major layoffs in the industry have made it a tough time for the crypto world. On top of that, regulators are struggling to keep up with the risks of such a volatile sector. And, as for Hong Kong, it's had a pretty skeptical stance toward crypto over the past few years with tough regulations in place.
More recently: Social unrest and COVID curbs throughout the pandemic led to a "brain drain" that threatened Hong Kong's status as a global financial hub. So, Hong Kong has been determined to rise above these challenges and crypto's setbacks to become the leading crypto hub in Asia. The city has been working on legalizing retail trading by March and creating a friendlier environment for digital assets.
The development: For example, one company, Matrixport, is reportedly considering Hong Kong as its new home base. Its current home, Singapore, is super cautious about virtual coins and may even ban retail token lending (although there’s some pushback from the country's leading crypto lobby). But, Hong Kong's crypto regulations are still being developed, making it difficult to know if it's the right move. But, Hong Kong has said it aims to learn from the sector's recent mistakes and create a new regulatory framework to boost confidence and growth.
"Companies are interested in the prospective crypto regime but also hesitant pending more details," said Bloomberg Intelligence ETF Analyst Rebecca Sin, referring to Hong Kong's evolving regulations toward the crypto sector.
"A consistent framework for crypto regulation is essential and key to growing institutional and retail adoption of digital assets at scale," said Yvonne Szeto, vice president at Worldpay from FIS, in a Bloomberg Television interview.
"We're ready to expand our local operations and add jobs once the road map from the government is more clear on what is allowed and encouraged," said Justin Sun, strategist at Huobi exchange.