Hong Kong and Singapore Centra to the next phase of Crypto Currency
Hong Kong and Singapore Centra to the next phase of Crypto Currency
crypto currency has once again rapidly shifted in it’s trajectory with where it find’s itself emerging. From it’s early life in the coal fields of China then a U.S attempt to attract miners and the growing sector.
This substantial increase from the low 2% allocation observed in 2021 to the now growing prominence of these Asian financial hubs in the crypto sector. Showcase the willingness of investors to shift back to an Asian central control.
Hong Kong and Singapore have continued to develop crypto friendly policies and laws to attract the emerging industry with the first licenses issued in October 2023 with more companies being green lite to operate services in the Asian region.
Factors Driving the Shift
Analysts at PitchBook attribute this transformative shift to a number of core events most notably the collapse of Sam Bankman-Fried's FTX crypto centralised exchange (CEX). The subsequent bankruptcy ripple effect prompted U.S.-based crypto companies causing players to reevaluate their strategies steering them towards the more crypto friendly environments of Hong Kong and Singapore.
The report provides a view surrounding the impact of regulatory uncertainties and the entanglement of major crypto firms like Binance and Gemini with authorities. Which has caused many companies to have to downsize their U.S. operations and sought refuge in crypto friendly jurisdictions abroad.
According to Bryan Chow, a partner at web3 VC investor Side Door Ventures the supportive government stance towards web3 and crypto in Hong Kong has enticed numerous companies to relocate their base of operations.
This has seen the decentralised world flourish in the Asian pacific and provide safe investment opportunities for VC’s wishing to invest in the emerging industry. Retail investment has also continued to grow in these regions providing a safer environment for many.
Opportunity
The ban on crypto trading in mainland China has proven to be an unexpected opportunity for Singapore and Hong Kong to position themselves as leaders in decentralised finance (De-Fi). Which provided Hong Kong the ability to issue its first retail trading licenses for Bitcoin (BTC) and Ether (ETH) in August this year.
While Singapore granted Coinbase a full trading license in October. These regulatory advancements are seen as strategic moves to capitalise on the void left by China's restrictive stance on crypto.
Despite these challenges which include the collapse of local crypto lender Three Arrows Capital (3AC), the Singaporean government continues to extend support to the crypto industry.
However, this support comes with a stricter regulatory requirements and oversight reflecting the government's commitment to ensuring stability and security in the crypto space.
Financial impacts
In November PitchBook reported a significant drop of more than 60% in overall crypto funding during the third quarter of 2023 compared to the same period in 2022. This downturn has compelled prominent crypto leaders which include Coinbase to scale back their support for crypto startups and new chains.
Despite the pull back in start up funding the surge in investment in Hong Kong and Singapore becomes even more interesting as it showcases the regional resilience and attractiveness amidst a global funding decline.
The increasing concentration of crypto ventures in Hong Kong and Singapore not only showcases the region's growing influence but also presents opportunities for global collaboration and innovation.
As these hubs become focal points for blockchain and crypto development partnerships between local and international players are likely to flourish under this fostering a dynamic ecosystem.
The shift of over 11% of global venture capital funding to Hong Kong and Singapore in 2023 signifies another shift in moment for the crypto industry as it moves back to an Asian central control.
While the challenges continue to persist on a global scale these Asian hubs are carving out a distinct niche presenting a clear pathway for growth, stability and collaboration with more access to funding.
As the crypto market continues to evolve keeping a keen eye on the developments in Hong Kong and Singapore is essential for understanding the sector's trajectory and potential future opportunities. We can potentially look forward to seeing more and more projects launch in Singapore or Hong Kong leading to another bunch of projects to drive the bull run in 2024.
Image sources provided supplemented by Canva Pro Subscription. This is not financial advice and readers are advised to undertake their own research or seek professional financial services.
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Who knows if Hong Kong and Singapore already invested large in cryptocurrency secretly and maybe that is why they are making cryptocurrency policies that are friendly
there will be ways that people do things and this is proving to be true. Seeing through the FUD is important and we can keep things going forward like they are doing in Singapore and others!