Hong Kong has thrown down the gauntlet in its race with regional rival Singapore to be a digital asset hub, saying it wants to develop a “vibrant sector and ecosystem for virtual assets” in the territory. The announcement kicked off the five-day Hong Kong FinTech Week on Monday, which is expected to see some 20,000 attendees descend upon the Hong Kong Convention and Exhibition Centre in what is likely the largest finance industry gathering there since the city reopened its borders following a long period of isolation due to the COVID-19 pandemic.
In a brief statement published on Monday, the HK government said it “will put in place timely and necessary guardrails to mitigate actual and potential risks in line with international standards, so that VA (virtual asset) innovations can thrive in Hong Kong in a sustainable manner.”
The HK SAR government also noted that it is working on a new licensing regime for VA service providers. “We are ready to engage with global VA Exchanges and invite them to set foot in Hong Kong for new business opportunities,” it said.
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Virtual asset projects currently being developed in Hong Kong include non-fungible token (NFT) issuance for Hong Kong Fintech Week 2022, Green bond tokenisation, and e-HKD.
Cryptocurrency rules for retail investors are likely to relaxed going forward, as Hong Kong looks to set itself apart from mainland China, which has a blanket ban on cryptocurrency trading. Local regulators are currently weighing opening up participation beyond institutional and professional investors, while preparing to establish a licensing system for virtual asset service providers, as it seeks to bring back fintech businesses to the city.
Race for hub status
“It is great to see the rising number of crypto hubs in places like Singapore and Hong Kong. I think Hong Kong has a great potential in the future marked by today’s announcement. The city has a desirable tax system and a well-run capital market. I look forward to seeing more policy developments in the structured derivatives products in the near future,” Adrian Wang, CEO of Metalpha, a global crypto derivatives service provider headquartered in Hong Kong with key offices across Asia, told Blockhead.
HK Fintech Week faces stiff competition from rival Asian financial hub Singapore, which is holding the Singapore Fintech Festival during the same week. The conference, hot on the heels of Token 2049 Singapore last month, is expected to attract some 60,000 attendees and 800 speakers from November 2 to 4.
Despite its strong stance against retail participation in the space, Singapore is generally viewed as more progressive to its Northern Asian rival when it comes to the digital assets sector. However, it is set to restrict retail participation even further.
The city-state has also benefitted from the exodus of finance professionals from Hong Kong during COVID-19. Hong Kong’s reopening following the pandemic has also been much slower – the city only removed quarantine requirements for incoming visitors this month.