Hostile moves by US regulators towards the crypto industry tend to dominate the headlines, which can sometimes lead people to overlook the fact that crypto is a global enterprise. In fact, this is one of the key selling points of decentralized, public blockchains: that they do not belong to anyone, and certainly not to any one region. Essentially, crypto is borderless, which means that while what happens in the US is important, we should pay attention to what’s unfolding globally.

With this in mind, events in Asia are of long-term significance, and the story there, at the moment, is focused on three key players: Hong Kong, Singapore and China. The last of those, China, has shown ongoing belligerence towards cryptocurrencies, repeatedly banning Bitcoin in various ways. Currently, there are restrictions on crypto transactions, and the official attitude is frosty. That said, the observation has been made that if you have to ban something more than once, then banning is perhaps not an effective policy, and Beijing must be aware that digital assets are a reality to be dealt with, sooner or later, beyond just blanket prohibition.

Will Hong Kong Be a Crypto Hub?

It’s a different story when it comes to Hong Kong. While the Chinese mainland restricts crypto use, Hong Kong has proposed rules allowing licensed exchanges to serve retail traders. This is possible through Hong Kong’s status as a Special Administrative Region (SAR), which gives it enough independence from Beijing to pursue its own policies.

Hong Kong has long had a reputation as a financial hub, and as the world transitions further towards digital assets, it is plausible that the mainland Chinese authorities may regard Hong Kong as a testing ground from which, through observation, Beijing’s own approach to crypto and web3 might be recalibrated.

There must remain some concerns about Hong Kong’s future, as although the region has independence to a significant degree, it is a part of China that is raising questions about the extent to which it will always be able to operate without unwanted political pressure. However, there are indications that the Chinese authorities are open to Hong Kong integrating the crypto industry, with reports of state officials attending crypto gatherings in Hong Kong. The hope, then, must be that positive results in the autonomous region, along with a global acceptance of digital assets, can result in a shift in attitude on the mainland.

The Singaporean Approach

And then, there is Singapore, which has also been touted as a potential Asian crypto hub, and which is taking a discerning approach that may help to improve crypto’s image. It appears that Singapore wants to distance itself from the speculative aspects of the crypto world, and instead, position itself as a frontrunner when it comes to blockchain-enabled instant settlements, the tokenization of assets, and programmable currencies.

These indications come from the Monetary Authority of Singapore (MAS), whose Managing Director, Ravi Menon, has stated: “Yes, we want to be a crypto hub, but if it is about trading and speculating in cryptocurrencies, that is not the kind of crypto hub we want to be.”

The Singaporean vision appears to be focused on a selective and sanitized version of crypto, which strips away the more volatile aspects of the industry. It also avoids the kinds of controversies that defined 2022. This reflects a widespread sentiment in the industry that crypto needs to mature, with the damage caused by FTX constituting the type of reputational low point that can no longer be tolerated if crypto is to be taken seriously.

However, while US regulators have responded to crypto lawlessness by acting in a bluntly hostile manner, it appears that Singapore is taking a more nuanced approach, and attempting to separate out the valuable parts of the technology from its more dubious aspects.

Additionally, Hong Kong’s strategy will proceed with caution, and regulation from its Securities and Futures Commission (SFC) is critical to the process, but, in Singapore, the sense is that regulators are willing to engage constructively.

A Global Shift

Back in the west, uncertainty about the longer-term attitude of the US authorities towards crypto adds to a perception of unpredictability around the industry’s position. One might expect that America would have more fully embraced crypto and its spirit of tech innovation, and yet, US regulators sometimes appear actively set on pushing development overseas.

Counterintuitively, US actions may result in an industry focused on decentralization making its home right next door to China, the most centralized and authoritarian of major geopolitical actors. As mentioned, Hong Kong has to contend with the possibility of interference from Beijing, which could make for a strange situation: a potentially thriving Asian crypto hub, evolving around an industry built on notions of monetary freedom, but operating under constant observation from a one-party state. However, there is also the possibility that if Hong Kong, and perhaps Singapore, come to thrive as centers for the crypto industry, then the door to crypto acceptance can be levered open in China.

The future of financial tech and cryptocurrencies is in flux, but, in contrast to the unwelcoming image currently being projected by US regulators, it’s locations such as Hong Kong and Singapore, where the authorities remain open-mindedly nuanced in their outlooks, that appear to be clearing a path to integration.

   

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