After China implemented a blanket ban on cryptocurrencies in 2017, Singapore and Hong Kong have emerged as the leading business-friendly destinations for East Asian crypto companies aiming to raise funds via Initial Coin Offerings (ICOs).
Singapore Becoming a ‘Hub’ For Crypto Businesses
Anson Zeall, chairman of Association of Cryptocurrency Enterprises and Startups in Singapore, informs that while it may be too early to term the city as an “ICO hub,” owing to a reasonable amount of undone work, a lot of significant activity and token issuances have taken place in the city since September 2017.
Moreover, Singapore has been taking efforts into setting up a number of incubators and venture funds focused on cryptocurrency investments.
The city was named as the third largest ICO launchpad in the world, only behind U.S and Switzerland, regarding funds raised.
For Chinese entrepreneurs, the only choice is to move to “crypto-friendly” countries. Speaking about on the subject is Daisy Wu, whose file-sharing blockchain app Xender’s subsidiary MovieChain had to relocate to Singapore for continuing the business.
“Many Chinese companies have gone to Singapore for ICOs. We all want to play it safe. We wanted to avoid legal risks.”
The city is witnessing a surge in incubators, investment funds, and even legal offices, of which charge over $200,000 as an advisory fee, who are all interested in the cryptocurrency sector.
Hong Kong Rivals Singapore in Enticing Crypto Businesses
Hong Kong has also been experiencing a similar story. The city follows a different judicial system than that of Mainland China, and hence the Chinese crypto ban is not applicable to the island-nation.
Ban Yates, a fintech lawyer, based in Hong Kong, states that ICOs queries are definitely on the rise.
“The obvious next step for many Chinese ICO issuers to take is to cross the border. You can still speak Chinese, but you can operate in a more favorable regulatory environment.”
While Hong Kong and Singapore indeed aren’t the only crypto-friendly cities in the Eastern hemisphere – Japan, Taiwan, and South Korea are also major players in the region – the strong presence of leading banks, hedge funds, and financial service companies entice businesses to set up shop.
In the wake of rising institutional interest in the cryptocurrency space, the proximity to financial players could form the difference between a company getting funded or not.
Apart from the undoubtedly plentiful networking opportunities, the cities waive taxes on financial gains, giving the investors one less item to worry about.
China’s Ban a Regressive Move
After increasing worries over the scams related to finance and money laundering, China placed a blanket ban on ICOs, terming them as an “illegal” vehicle for fundraising. The move negatively impacted over a dozen Chinese ICOs, who were forced to shutter their business.
An estimated 70 percent of the world’s bitcoins are mined in China, which unsurprisingly houses the largest bitcoin mining pools as well. Before 2017’s ban, Chinese investors contributed a whopping 2.6 billion yuan worth of crypto, putting the nation at the epicenter of digital currency investing.
The ban came as a serious and surprising blow to all cryptocurrency enthusiasts, with the crypto market experiencing a massive sell-off in the days after the directive. China’s loss was Singapore’s and neighboring Hong Kong’s gain, with significant economic benefits arriving for both cities.
As reported by BTCManager, South Korean companies are also looking for business hubs to relocate to, after the country banned ICOs in 2017. With this in mind, Singapore and Hong Kong may see a lot more businesses being set up in the near future.