Hong Kong and Singapore are two of the leading crypto hubs in Asia. And in recent years, many international crypto companies have found a home in both cities.

For example, the multi-billion dollar digital asset company Amber Group is headquartered in Singapore but has never forgotten its roots in Hong Kong.

Indeed, in interview With Bloomberg, Amber Group Managing Partner Annabelle Huang said the company maintains one of its largest offices in Hong Kong. It is also preparing to apply for a new Virtual Asset Trading Platform (VATP) license in the city.

Discussing the respective scenes in two of the prominent crypto hubs in Asia, Huang said “For us, the two markets are equally important.” In the context of expansion, she added, “Hong Kong is kind of leading the way at the moment, but Singapore isn’t closing the door completely.”

Two cryptocurrencies diverge on retail regulation

Certainly, Singapore and Hong Kong differed in their regulatory approaches to crypto assets.

Singapore initially attracted cryptocurrency companies with its convenient licensing system. Recently, however, the Monetary Authority of Singapore (MAS) has taken a much tougher stance on trading platforms.

Specifically, MAS has banned cryptocurrency exchanges from marketing or promoting their services to members of the public. It also issued repeated warnings warning retail investors about the volatility of crypto assets.

This year, MAS proposed further measures that could restrict retail investors’ access to certain crypto offerings. This would prevent investors from borrowing to fund cryptocurrency purchases. They will also prohibit companies from lending or mortgaging their coins to get returns.

However, despite the somewhat paternalistic stance of the financial regulator, interest in cryptocurrency remains strong in Singapore.

Meanwhile, with the VATP license, Hong Kong has created a regulatory path for crypto exchanges to set up shop. Instead of a blanket ban on any specific activities, the new regime will require exchanges to register with the Securities and Futures Commission (SFC).

Under the previous framework, SFC-licensed platforms can only serve professional investors. However, without creating a space for retail cryptocurrency trading within regulated entities, people often turn to unregulated platforms.

Rather than taking a prohibitive approach, the new Value Added Tax (VATP) rules will require retail trading platforms to implement enhanced safeguards. These will include prep steps that assess risk profiles of users and strict token due diligence standards.

Japan is going its own way

Certainly, Singapore and Hong Kong may attract the most international attention. But beyond the major hubs, other Asian markets are also developing their own crypto scenes.

Last year, the Amber Group gained a foothold in Japan with its acquisition of cryptocurrency exchange DeCurret.

However, referring to the intended sale of the unit, Huang said that the retail cryptocurrency market is not a strategic priority for the company at this time. Instead, Amber is focused on serving institutional clients and would likely offload DeCurret to a potential buyer.

However, the company has no intention of giving up on the Japanese market. “Japan is still booming, especially in terms of the various Web3 applications that come out of it,” Huang insisted.

Certainly, Japan has not proven to be a particularly profitable market for cryptocurrency exchanges and many have struggled to break even. Compared to anywhere else, trading platforms are highly regulated. Japan’s Financial Services Agency (FSA) imposed strict rules for security and consumer protection.

Although this has created a particular regulatory environment in the country, advocates of Japan’s approach point to the case of FTX Japan as evidence of its success.

FTX clients elsewhere are still coming to terms with the fact that they may never be able to recover their assets. But the platform’s Japanese user base has managed to withdraw all of their cash and cryptocurrency.