Home » 2023 saw a shift in Asia’s cryptocurrency regulations, with Hong Kong taking the lead.

2023 saw a shift in Asia’s cryptocurrency regulations, with Hong Kong taking the lead.

Many international cryptocurrency companies are moving to Hong Kong and Singapore, which seem to be leading the way in Asia this year in terms of crypto regulation.

by V. Sinclair
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As the year draws to a close, there have been notable events with increasing pace in Asia’s regulatory landscape for the cryptocurrency business. Particularly, Hong Kong has led the charge in attempts to position itself as a center for Web3 and cryptocurrency innovation.

An overview of the major cryptocurrency advancements in Asia this year is provided below.

Hong Kong is developing becoming a Web3 hub.
With the official launch of its cryptocurrency licensing program in June, Hong Kong now permits licensed exchanges to provide retail trading services for virtual asset trading platforms. HashKey and OSL have been granted these licenses by the regulatory body.

The investor base for cryptocurrency ETF engagement was expanded in October when the Securities and Futures Commission of Hong Kong revised the guidelines for intermediaries regarding virtual asset-related operations. In addition, the regulator announced that applications for spot cryptocurrency exchange-traded funds (ETFs) will be accepted starting in December and released two circulars in November with the goal of monitoring the city’s tokenization efforts.

During Hong Kong Fintech Week in November, Christopher Hui, Secretary for Financial Services and the Treasury in Hong Kong, reiterated the government’s support for Web3 expansion. Hui stated that regulatory activities won’t weaken their resolve in spite of recent crackdowns on the JPEX cryptocurrency exchange.

Hui stated, “We’ve been questioned a lot of times if JPEX will weaken our resolve to expand the web3 industry. “There is a definite no,”

The chief operating officer of Hong Kong-based cryptocurrency platform VDX, Donald Day, told The Block that “the regulatory regime in Hong Kong is a competitive advantage for setting up and running a compliant digital asset business.” “While these jurisdictions had to reverse course and tighten their regulatory frameworks, Hong Kong’s structure has proven to be stable, dependable, and effective over time.”

The CEO of Asia-Pacific digital asset management company Metalpha, Adrian Wang, stated that cryptocurrency investors were taken aback by “the speed at which Hong Kong is catching up to Singapore’s well-balanced regulatory framework.”

It is true that when it came to creating and evaluating policies appropriate for digital assets, Singapore had an advantage. As early as 2022, for instance, DBS traded fixed-income instruments on JP Morgan’s Onyx network, according to Wang. But since last year’s Hong Kong Fintech Week, SFC has been progressively implementing its VASP license regime in an effort to draw top-tier cryptocurrency companies to establish operations in Hong Kong.

Singapore is calling.
While Hong Kong still shows industry participants how welcoming it is to the cryptocurrency field, Singapore continues to draw many international businesses to establish headquarters there in the web3 and cryptocurrency spaces. However, the city-state has had a number of cryptocurrency-related crises in the past year, including the collapses of Three Arrows Capital, Vauld, and Hodlnaut.

However, despite recently awarding licenses to cryptocurrency companies like Coinbase and Circle, the Monetary Authority of Singapore seems determined to continue policing these businesses. In June, Gemini also said that it was preparing for expansion throughout Asia and that it intended to hire over 100 people in Singapore.

A super-app for ride-hailing that is well-known in Southeast Asia called Grab has already begun to integrate web3 services with NFT wallets. It agreed to participate in a pilot study conducted by the MAS in June that focused on the usage of three digital assets: stablecoins, tokenized bank deposits, and digital currencies issued by central banks.

Taiwan, South Korea, and Japan
Although Hong Kong and Singapore have become the most well-known cryptocurrency hotspots in Asia, other countries including Japan, South Korea, and Taiwan have also developed pertinent laws and policies for the developing sector.

For instance, Japan updated the Payment Services Act in June to add restrictions pertaining to stablecoins. According to reports, the Japanese government worked to protect stablecoin investors following the collapse of TerraUSD. The USDC stablecoin issuer, Circle, has partnered with SBI Holdings, a major Japanese securities and banking company, to increase its footprint in Japan as a result of the favorable outlook.

In the meantime, the municipal administration of Busan, the second-largest city in South Korea, revealed in November that two businesses have applied to run a digital assets exchange called Busan Digital Asset Exchange, with the goal of opening for business in the first half of 2019.

The third-largest pension fund in the world in terms of assets, the National Pension Service of South Korea, is likewise optimistic about the cryptocurrency market. According to its holdings report, it spent $19.9 million on Coinbase shares during the third quarter of this year.

Taiwan is currently developing further legislation pertaining to the cryptocurrency sector. A draft crypto act that would force all cryptocurrency platforms operating in Taiwan to apply for a permit was formally introduced by Taiwan in October for first reading. Regulators could order them to stop operating if they didn’t comply.

Yung-Chang Chiang, a Taiwanese lawmaker, told The Block that although Taiwan’s financial authority published guidelines in September allowing the cryptocurrency industry to create its own self-supervisory norms through a prospective industry association, such measures lack legal enforceability.

Since its regulator implemented anti-money laundering regulations in July 2021, Taiwan has previously mandated that cryptocurrency trading platforms adhere to anti-money laundering laws.

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