India has been attracting the attention of both the tech industry and the financial sector lately. Being the new most populous country in the world and seeing an extremely positive economic outlook, the country also seeks to become the main crypto hub in Southeast Asia. However, with Hong Kong’s SFC (Securities and Futures Commission) taking a “regulate to protect” approach when it comes to cryptocurrencies, India’s position as the region’s crypto leader might be in danger.
There has been a lot of development in the crypto space over the last several weeks. While the West seeks to limit the industry, which was seen through numerous SEC crackdowns, as well as similar moves in Canada, the East is embracing it. In fact, there have been many predictions that Asia will be the one to kick off the next big crypto bull run.
India stands out as one of the primary candidates, but recently, Hong Kong has challenged its claim to the leader of the crypto sector in Southeast Asia.
Hong Kong has doubled down on regulating digital assets, seeking to “regulate to protect,” as opposed to the US’ approach of regulation by enforcement. With many experts already speculating that the capital and talent could start moving to Asian crypto hubs, Hong Kong seems to stand as a clear choice for those seeking a crypto-friendly ecosystem.
Its regulator, the SFC, published a list of proposed rules for crypto trading platforms, and is now seeking feedback from the public. Its intention is to allow retail investors to trade freely on licensed exchanges. The regulator reasoned that those who wish to trade cryptocurrencies and invest in digital assets would find a way to do it, one way or the other. With that being the case, they would be better off trading on licensed platforms that the country can oversee and keep an eye on, than to do it on unregulated exchanges or offshore ones, which are outside of its jurisdiction.
Interestingly, it also seems that Beijing has quietly supported the move to regulate the crypto space, as some of its officials were seen on certain crypto-related events, with reports of positive communication during and after the events.
However, for the time being, even Hong Kong is keeping derivatives trading off the table, with the SFC saying that such instruments would become available later down the line.
Of course, India has been making its own moves, such as announcing taxation on crypto assets, which has actually boosted the morale of the industry, especially when it comes to startups and new players. With that said, it will be interesting to see how the two countries might approach crypto regulations now that they are in a direct rivalry, both seeking to capture talent and capital for themselves.