Asia’s regulatory landscape for cryptocurrency and other virtual assets is rapidly evolving. However many governments are hesitant to leave the market unregulated. Find out everything about crypto regulation in Singapore vs Hong Kong.
440A compares the current regulations around virtual asset service providers (VASPs) or digital payment token (DPT) providers in Singapore and Hong Kong, and the outlook on the regulatory environment.
Table 1: Licence requirements for VASPs: Singapore vs. Hong Kong
| Activity | Singapore | Hong Kong |
|---|---|---|
| Digital payment tokens | Payment Services Act (PSA) ● Standard/Major Payment Institution Licence |
Optional. Outlook: Exemption for licensing requirement expected to be removed through new bill in the upcoming 2021-2022 legislative session. |
| Other tokens | Securities and Futures Act | Securities and Futures Ordinance (SFO) ● Type 1 ● Type 7 |
| Decentralised exchanges | No explicit exclusion of decentralised exchanges. | Licensing applications from decentralised exchanges not accepted. |
We have written further on Singapore’s payments services act, and for details on new crypto regulations, check out this article.
Crypto Regulatory Outlook: Singapore vs. Hong Kong
The regulatory environment is a key factor in deciding where to set up your operations. Hong Kong is expected to tighten regulations on cryptocurrency trading, which will impact local market access.
It is expected that Hong Kong will no longer allow cryptocurrency exchanges to decide between operating as a licensed or unlicensed exchange, through the new requirement for all exchanges to be licensed, and only allowed to offer services to professional investors that meet minimum portfolio requirements. The territory targets to introduce changes through the 2021-22 legislative session which will kick off in October 2021. The retail investor segment is expected to become off-limits.
Table 2: Local market access outlook: Singapore vs Hong Kong
| Market Access | Singapore | Hong Kong |
|---|---|---|
| Current | Dependent on the type of licence. ● Retail investors ● Institutional investors |
● Only professional investors for regulated exchanges. ● No restriction on type of investors for unregulated exchanges. |
| Outlook* (2021-2022) |
Continues to be open to retail and institutional investors. | Only professional investors. Restricted from offering services to retail investors. |
*Based on “Consultation Conclusions: Public Consultation on Legislative Proposals to Enhance Anti-Money Laundering and Counter-Terrorist Financing Regulation in Hong Kong”, May 2021.
Launching Your Business in Asia: Crypto regulation in Singapore
For crypto firms looking to establish a presence in Asia, the outlook on Singapore’s regulatory environment makes the country an attractive place to set up operations.
Ensuring your business is well-prepared to engage with the fast-moving crypto and digital asset market positions you for success.
440A can support your business setup in an evolving economy. Talk to us now to have an assessment of your viability, advice on the best way to set up your operations and support to navigate the regulatory landscape.
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