Singapore and Hong Kong are the two hot destinations for crypto businesses to launch their Initial Coin Offerings (ICOs) and token sales, according to the latest industry reports. After China and South Korea introduced a blanket ban on ICO operations last year in September 2017, companies have been flocking in search of friendlier jurisdictions.
The number of Token Sales has skyrocketed in Hong Kong and Singapore in the last few months, as they provide a more favourable and conducive environment for such businesses. A legal framework is set in place, and companies can abide by local regulations.
The South China Morning Post recently quoted Anson Zeall, chairman of the Association of Cryptocurrency Enterprises and Startups Singapore saying: “We cannot say Singapore has become an ICO hub yet, as more work needs to be done, but yes, there has been a lot of activity since September last year.”
Many believe that this sudden shift of crypto businesses is only due to the crackdown by China after Beijing termed it as an illegal fundraising tool raising concerns over money laundering and financial scams. Although China has imposed stringent regulations banning the operation of any sort of crypto-activity, Hong Kong has remained a lot open to it and as result, it has witnessed a sharp increase in token sales.
Both Singapore and Hong Kong don’t have any specific rules for ICOs as lawyers and issuers of ICO said that the process of fundraising using digital tokens remains very loosely regulated.
Daisy Wu who is working for Beijing-based Xender said that her company decided to move to Singapore after Beijing introduced ICO ban as they completely wanted to ignore any sort of legal risks. Wu said: “Many Chinese companies have gone to Singapore for ICOs…We all want to play it safe.” Xender is currently trying to raise $10 million USD for a file-sharing service by the means of a token sale.
Ben Yates, a lawyer who specialises in cyber and finch laws said that after September 2017, he has witnessed a significant increase in ICO-related inquiries. Yates said: “It is very likely that the surge in the number of ICO inquiries we have received in the past few months is at least partly a consequence of the restrictions in mainland China…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 favourable regulatory environment.”
Both – Singapore and Hong Kong have not introduced any sort of capital gains tax on cryptocurrencies making it easy for ICO issuers to operate while creating easy transport routes with the rest of the world.
However, many analysts still believe the ICO markets to be very risky and want investors to take a cautious stand while investing in them. Zennon Kapron, director of the market intelligence firm Kapronasia based in Shanghai said: “There are significant financial risks involved in ICOs, and that is why the Chinese government, and others, have cracked down on ICO issuance. It is a completely new and largely unproven form of financing where retail investors could be left holding the bag.”