Singapore, Hong Kong and Malta are all small island-states with plenty in common apart from size and density. In this month alone, we see three key events across these locales being held – the Hong Kong FinTech Week, Singapore FinTech Festival and Malta Blockchain Summit.
All three countries are recognised for their ability to embrace new technology, an English-speaking business environment and ease of foreign investment and money transfer that complements sound financial and legal regulation. According to the Bulletin, the largest draw of being a cryptocurrency hub includes jobs, competition and tax revenue that stimulate the economy.
Blessed with stable governance and strategic geographical positioning, the three nations referred to as ‘Blockchain Islands’ have the right talent, market, government supervision and regulatory structures. They have the framework and tools to locate cryptocurrency exchanges and drive support from larger institutions. Here, we take a closer look at what makes these tiny island-states attract disruptive FinTech firms and be receptive to developing cryptocurrency on the global financial stage.
Robust legislature framework
All three countries support cryptocurrency expansion and have in place, sound policies and regulations designed to enable them to be leading ICO hubs.
For Hong Kong, its proximity to China has helped accelerate its integration of FinTech innovation. The Special Autonomous Region also benefited when China decided to impose strict restrictions on banks and other institutions who dealt with digital currency. According to the South China Morning Post, the Hong Kong government regards cryptocurrencies as “virtual commodities”, which are not subject to regulation, provided the cryptocurrency does not bear or resemble qualities that of a “security”.
Surprisingly despite its uptight and repressive reputation, the Singaporean government has decided to be more hands off about cryptocurrency regulation. The Monetary Authority of Singapore has been quoted as saying they are “assessing if additional regulations are required for investor protection.” A more distinct and developed legal framework is likely to be drawn up but unlike China, with no intent to enforce a ban.
Malta’s lack of any definitive cryptocurrency regulation have also made it like Singapore, a desired spot to set up a business, be it a blockchain exchange or a FinTech start-up. Similar to Singapore’s easy-going approach, Malta is also in the midst of revising and modifying its regulation, which apparently is favourable of cryptocurrency adoption. Showing signs of quick penetration, Binance, Tron and OKEX Tech have chosen Malta to be their business headquarters.
As of 1 November 2018, two pivotal new regulations are introduced to better monitor crypto activity in the Mediterranean state that is a mix of Arab, Italian, French and British influence. The regulations, Virtual Financial Assets Act (VFA) and the Innovative Technology Arrangement and Services Act (ITAS) were introduced in response to the flurry of cryptocurrency activity and investment in Malta.
Luring volumes of expatriates
All three island-states are renowned for attracting diverse pockets of expatriates, many of whom are in financial services or FinTech. According to the Business Times, Hong Kong and Singapore have traditionally been in a tight sprint to attract talent for multinationals’ regional headquarters that are situated in both cities.
Singapore is internationally Number 2 for the ease of setting up your own business as the country’s efficiency and transparency makes it simple to get through regulatory roadblocks and connected to the right resources, according to the World Bank. Hong Kong, is also relatively a breeze, with its ecosystem being ranked Number 4 in terms of how easy it is to be a business owner.
Though red tape isn’t quite as straightforward to untangle in Malta, it has the incentives of low tax and a favourable ‘tax refund’ scheme, which attracts international firms in offshore finance and wealth management. With scores of investment-savvy and forward-thinking finance professionals, these three locales see strong receptiveness to making cryptocurrency a more reliable and legitimate space.
They all have innovative digital capabilities
All three countries are early adopters of digitisation and constantly seeking ways of extending digital solutions across industries. The three ‘Blockchain Islands’ also possess a mass of customers that are suited to digitalised and e-business – with relatively strong smartphone adoption, people who are savvy with FinTech and e-commerce, sizeable expat and migrant pools as well as a huge volume of unbanked individuals. These qualities make them extremely adept at reinventing their financial landscapes and improving measures to introduce digital currency.
According to a report by the Malta Chamber of Commerce, the barriers to market entry in Malta have never been more penetrable. Innovation is also a direction that the Maltese government is working towards, says Ivan Bartolo, digital entrepreneur and former Nationalist Party candidate. Malta is developing its capabilities to test-bed innovation in areas including responsive traffic congestion solutions, digital regulation enforcement, healthcare apps, online education portals, and other key infrastructural plans.
Singapore’s digital innovation is also fiercely competitive and expanding at an unprecedented rate covering FinTech, MedTech, media, AI, robotics and e-commerce among a plethora of industries. Some of Singapore’s business leaders attribute it to the city’s world-class infrastructure that nurture a hub for start-up activity.
“Over the past couple of years, Singapore will also become a centre for start-up activity. It’s a great environment for us to be in because we often become the bridge between global clients who are doing digital reinvention and need the fresh thinking of a start-up to change,” says ASEAN Lead for IBM iX Stefan Hirsch in an EDB (Singapore Economic Development Board) report.
Collaboration is also key to coming up with top-notch world-class solutions says Accenture’s ASEAN Senior Managing Director Teo Lay Lim in an EDB report. “In the digital world, no company stands alone or can do it all. It requires collaboration, co-creation to succeed and you want to be in a place where the ecosystem exists so you can find partners, from start-ups to niche solution providers to global companies.”
Among the three nations, Hong Kong’s digitisation path ahead feels the rockiest, with several multinationals relocating to China’s coastal cities such as Chengdu and Xiamen. Start-ups operating in Hong Kong also receive limited government and institutional support as compared to Singapore or London and a ‘Smarter Digital City’ white paper by Google observes most Hong Kong companies are spending on “basic” activities like website and content development, e-commerce, and CRM, without giving much thought to execution and integration.
Across the board, both traditionally bureaucratic as well as more nimble sectors feel a strong urge to develop their digital-driven innovation, necessary for encouraging financial diversification and incorporating blockchain technology. From AXA, HSBC, Lan Kwai Fong, a hospitality and nightlife venue, Airport Authority Hong Kong and Lane Crawford, retail agency leaser and consultancy, these organisations have had their efforts in scaling digital transformation recognised by the IDC (Enterprise Internet Data Centre Hong Kong).
“These digital changemakers have been honoured for making radical and difficult changes to their organisational structure, having a single strategy, new metrics, and an integrated technology platform for scale,” says Daniel-Zoe Jimenez, Research Director for Digital Transformation, IDC Asia-Pacific.