Blockchain and Crypto Funding Shifts to Hong Kong and Singapore
Throughout 2023, more than 11% of global venture capital (VC) funding in blockchain and crypto projects was directed towards companies based in Hong Kong and Singapore. This is a significant increase from the mere 2% allocation in 2021, according to analysts at PitchBook.
The Impact of Regulatory Uncertainties
The rise in funding for Hong Kong and Singapore can be attributed to various factors. One of them is the collapse of FTX crypto exchange, which triggered a domino effect leading to bankruptcy for several U.S.-based crypto companies. As a result, these companies had to reevaluate their strategies and seek opportunities elsewhere.
Additionally, regulatory uncertainties and the troubles faced by major crypto firms like Binance and Gemini have prompted many companies to downsize their operations in the United States. Some have chosen to relocate to crypto-friendly jurisdictions overseas, with Hong Kong being a popular choice.
Hong Kong and Singapore’s Supportive Stance on Web3 and Crypto
According to Bryan Chow, partner at web3 VC investor Side Door Ventures, many crypto companies have shifted their base of operations to Hong Kong due to its government’s supportive stance on web3 and crypto. This favorable environment has attracted businesses seeking a more welcoming regulatory landscape.
Hong Kong and Singapore have also capitalized on the ban on crypto trading in mainland China. Hong Kong issued its first retail trading licenses for Bitcoin (BTC) and Ether (ETH) in August, while Singapore granted Coinbase a full trading license in October.
Challenges Faced by the Crypto Industry
Despite the shift in funding towards Hong Kong and Singapore, the overall crypto funding landscape experienced a significant decline. PitchBook reported a drop of over 60% in crypto funding during the third quarter of 2023 compared to the same period in 2022. This situation has compelled various crypto startup funders, including Coinbase, to reduce their support for projects.
Hot Take: Hong Kong and Singapore Emerge as Crypto Hubs
With the collapse of FTX and regulatory uncertainties in the United States, Hong Kong and Singapore have emerged as prominent destinations for blockchain and crypto ventures. Their supportive government stances, retail trading licenses, and favorable regulatory environments have attracted companies seeking stability and growth opportunities. As the crypto industry continues to evolve, it is crucial for businesses to adapt and explore new markets that provide conducive ecosystems for innovation and development.
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