As the global financial landscape evolves, digital assets are emerging as a key frontier for economic innovation—and in Asia, two major financial hubs are locked in a high-stakes competition to lead the charge. While both Singapore and Hong Kong have made strategic moves to position themselves as premier destinations for digital asset firms, recent developments show Singapore pulling decisively ahead.
Regulatory momentum, licensing efficiency, and a forward-looking approach to blockchain innovation have given Singapore a significant edge. In contrast, Hong Kong’s more cautious and restrictive framework has slowed its progress—despite early ambitions to rival its Southeast Asian counterpart.
Singapore’s Accelerated Licensing Push
In 2024, Singapore granted 13 new licenses to digital asset service providers—a major leap from the previous year. Among the approved operators were global leaders like OKX, Upbit, Anchorage, BitGo, and GSR, signaling strong international confidence in the city-state’s regulatory environment.
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This aggressive licensing pace reflects Singapore’s proactive strategy under the Payment Services Act, which provides clear compliance pathways for crypto businesses. The Monetary Authority of Singapore (MAS) has emphasized collaboration with innovators while maintaining robust anti-money laundering (AML) and investor protection standards.
By contrast, Hong Kong’s licensing regime has moved at a much slower pace. To date, only seven platforms have received full approval—four of them conditionally on December 18—and another seven operate under provisional licenses. Notably, major players like OKX and Bybit withdrew their applications altogether, citing regulatory uncertainty and operational constraints.
Regulatory Divergence: Openness vs. Caution
One of the most critical differences between the two hubs lies in their regulatory philosophy.
Singapore has adopted a balanced but enabling framework that encourages responsible innovation. It allows licensed platforms to offer a broader range of tokens—including many altcoins—provided they meet due diligence requirements. This flexibility attracts both retail investors and institutional capital seeking diversified exposure.
Hong Kong, however, has taken a more conservative stance. Only highly liquid cryptocurrencies like Bitcoin and Ether are permitted for retail trading. Smaller or more volatile digital assets—commonly referred to as altcoins—are effectively barred, limiting product offerings and dampening market enthusiasm.
“Hong Kong’s regulatory regime for exchanges is more restrictive in a number of ways that matter, such as custody of customer assets and token listing and delisting policies,” said Angela Ang, senior policy adviser at TRM Labs. “This may have tipped the balance in Singapore’s favour.”
Additionally, concerns about China’s strict crypto ban continue to influence business decisions. While Hong Kong operates under a “one country, two systems” model, its proximity to mainland regulations creates perceived geopolitical risk—especially for firms aiming to serve international markets without exposure to regulatory overreach.
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David Rogers, regional CEO at market maker B2C2—which has applied for a license in Singapore—called the city-state a “safe, long-term choice” for regional expansion. “It is a risk-adjusted approach we’re taking here,” he explained.
Institutional Adoption: Tokenisation Takes Off
Beyond retail trading, both cities are advancing blockchain adoption in traditional finance through asset tokenisation—the process of converting real-world assets into digital tokens on a blockchain.
Singapore has taken a leadership role via initiatives like Project Guardian and Global Layer 1, state-backed programs designed to explore the commercialisation of tokenised financial products. In November 2024, MAS announced expanded support for these efforts, aiming to bridge decentralised finance (DeFi) with institutional-grade infrastructure.
Meanwhile, Hong Kong made headlines earlier in the year by issuing HK$6 billion (S$1.05 billion) in digital green bonds using HSBC’s tokenisation platform. It also launched spot Bitcoin and Ether exchange-traded funds (ETFs) in April—yet investor response has been lukewarm.
While US-listed crypto ETFs have drawn over $120 billion in assets**, Hong Kong’s combined ETF offerings have gathered just **$500 million. Analysts attribute this disparity to limited marketing reach, narrower investor access, and a less dynamic ecosystem for secondary trading.
“Singapore’s framework encourages interaction between new entrants and established institutions,” said Ben Charoenwong, associate professor of finance at INSEAD. “Hong Kong’s focus on established financial institutions creates fewer opportunities for new entrants and limits the scope of innovation.”
FAQs: Understanding the Digital Asset Hub Competition
Q: Why is Singapore considered more crypto-friendly than Hong Kong?
A: Singapore offers clearer regulations, faster licensing, broader token availability, and strong government support for blockchain innovation—all within a politically stable environment.
Q: Can foreigners start a crypto business in Singapore?
A: Yes. Singapore welcomes foreign-owned digital asset firms provided they comply with MAS guidelines, including anti-money laundering (AML), cybersecurity, and capital adequacy requirements.
Q: Are crypto profits taxed in Singapore?
A: Generally, capital gains from crypto trading are not taxed for individuals. However, businesses engaged in regular trading may be subject to income tax.
Q: Why did OKX and Bybit pull out of Hong Kong?
A: Both companies cited restrictive rules on token listings, custody requirements, and uncertain timelines for full licensing approval as key reasons for withdrawing their applications.
Q: What is asset tokenisation, and why does it matter?
A: Tokenisation converts physical or financial assets (like bonds or real estate) into digital tokens on a blockchain. It increases liquidity, reduces settlement times, and opens up new investment opportunities.
Q: Is Hong Kong still relevant in the crypto space?
A: Yes—particularly for firms targeting Chinese-speaking markets or seeking ties with traditional finance. However, its influence lags behind Singapore’s due to tighter controls and slower implementation.
The Road Ahead: Innovation vs. Control
The divergence between Singapore and Hong Kong underscores a broader global trend: jurisdictions that foster collaboration between regulators and innovators tend to attract more investment and talent.
Singapore’s success isn’t just about issuing licenses—it’s about building an ecosystem where startups, financial institutions, and technology providers can co-develop solutions with regulatory clarity. Its emphasis on sandbox testing, cross-border interoperability, and institutional-grade DeFi infrastructure positions it as a model for sustainable digital asset growth.
Hong Kong still holds advantages—its deep pool of financial expertise, strong legal system, and access to capital markets remain compelling. But unless it streamlines approvals, expands permissible token offerings, and boosts market participation, it risks falling further behind.
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For global digital asset firms evaluating their Asian footprint, the message is clear: Singapore offers a more predictable, scalable, and innovation-friendly environment—making it the preferred hub for long-term growth in 2025 and beyond.
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