Here’s How Hong Kong Is Preparing to Take Away Singapore’s Retail Crypto Sector

Singapore is gearing up for stricter cryptocurrency rules after major implosions this year, while Hong Kong is pushing to legalize cryptocurrency trading.

A sea change is about to happen in Asian retail cryptocurrency. While on the one hand, Singapore is retreating from its crypto-friendly status, Hong Kong is taking new steps to establish itself as a cryptocurrency trading hub.

The implosion of Singapore's Terra and other crypto firms this year forced the Monetary Authority of Singapore (MAS) to take concrete measures with crypto regulations. As Hong Kong moves to crack down on retail cryptocurrency trading with looser rules, MAS chief Ravi Menon said:

“We don't want to compete with other jurisdictions, especially when it comes to regulation. We must do what is right for us, what is necessary to limit the risks. And the risks primarily harm small investors."

That being said, Singapore has been at the center of cryptocurrency this year. The collapse of hedge fund Three Arrows Capital and cryptolender Hodlnaut were the main explosions of the year. With these bitter experiences, Menon believes it would be right for them to tighten some crypto norms. In an interview with Bloomberg, the head of the central bank said:

“I think our latest proposals would be among the strictest in the world in terms of retail access to cryptocurrencies. And we think it's necessary."

He further added that he has no qualms about some retail crypto companies moving to other friendlier jurisdictions.

Restrictions on Retail Participation

On Wednesday, MAS presented proposals to limit retail participation in digital markets. This includes banning retail investors from both borrowing and financing coin purchases. The MAS consultation paper also proposed to prohibit companies from using tokens deposited by retail investors for lending, betting or any other income-generating activity.

Menon added that Singapore is still trying to become a crypto hub, but only with pure activities. This includes promoting proper tokenization areas and digital asset use cases.

On the other hand, Hong Kong is becoming a more crypto-friendly destination. It plans to legalize retail trading and support the licensing of crypto platforms by March next year. Both Hong Kong and Singapore will host financial technology conferences next week. It will feature the presence of high-profile crypto veterans such as Binance CEO Changpeng Zhao and FTX head Sam Bankman-Fried.