Smart regulation of cryptocurrencies needed in Hong Kong and Singapore
Both countries need to protect investors, curb money laundering, ensure transparency in rollout of ICOs
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FEW dispute that Asia will be the world's engine for economic growth and innovation in the coming decades. It is no surprise then that Asia is the fastest growing market for digital currencies. Fintech is a sector that requires bold leadership, not just from entrepreneurs but regulatory agencies as well.
Hong Kong and Singapore, traditionally rivals for the title of Asia's leading financial centre, are working together to take the lead in fintech regulation. In October 2017, Hong Kong announced a partnership with Singapore to form a blockchain-based network. The Hong Kong Monetary Authority (HKMA) and the Monetary Authority of Singapore (MAS) signed an agreement to foster cooperation on fintech - marking a shift for the trade finance industry, moving from a largely paper-based process to a digital platform. Combined leadership in fintech is the goal. MAS has said it has "no intention" of regulating cryptocurrencies.
Yet innovation from a regulatory point of view will increasingly be of paramount importance as governments grapple with the issue of how to prudently regulate this burgeoning industry without stifling growth or creativity. Hong Kong's government still sees bitcoin not as a currency but as a commodity, leaving it untouched by financial legislation. In 2016, HKMA worked with banks like HSBC and Standard Chartered to construct a trade finance platform by using blockchain technology to digitise and share trade documents, automate processes and reduce the risk of fraud.
