Will Singapore, Hong Kong step up crypto scrutiny as US cracks down on Binance, Coinbase?

The moves by the US SEC against Binance, Coinbase spooked investment sentiment just as Hong Kong seeks to establish itself as a trading hub along with Singapore

Unlike Singapore and Hong Kong, the US does not have comprehensive regulations for crypto and blockchain firms to operate without fear of regulatory action

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Hong Kong and Singapore may look at the US action as a reference point, which could mean tighter scrutiny even in the Asian hubs, analysts say. Photo: AFP

Published: 12:30pm, 9 Jun 2023

US regulatory action against two major cryptocurrency exchanges, Coinbase and Binance, is likely to serve as a reference point for Hong Kong and Singapore as they seek to balance growth with investors’ safety, analysts have said.

The crackdown is the latest in a series of measures by the US Securities and Exchange Commission (SEC), which has levied fines and other penalties against crypto-lending firms, following the collapse of one of the most-reliable crypto exchanges FTX last November that sparked public outrage.

The SEC said Coinbase had acted as a broker, exchange and clearing agency for investments without proper registration. The complaint came a day after the regulator sued Binance, alleging it had tried to evade US regulation.

Binance said the enforcement action was unwarranted and alleged it was a regulatory “overreach” that damages the United States’ status as a global financial hub. Paul Grewal, Coinbase’s general counsel, said in a statement that the company would continue operating as usual and had “demonstrated commitment to compliance”, according to Reuters.

The development spooked investment sentiment just as Hong Kong is seeking to frame regulations to establish itself as a trading hub along with Singapore, which already has such a framework.

The two cities may look at the US action as a reference point, which could mean tighter scrutiny even in the Asian hubs, analysts say.

“There will be a fallout for sure. Hong Kong and Singapore are taking measures to regulate the cryptocurrency industry by proposing new licensing regimes for virtual asset trading platforms,” said Anndy Lian, Singapore-based author of the book “NFT: From Zero to Hero”.

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