Cryptocurrency is turning to Asia for a revival while the nascent sector in the United States is under attack.
Increased regulatory transparency in Hong Kong, Singapore and Japan goes hand in hand with enforcement actions and legal challenges from U.S. agencies and Congress against legislation to clarify the status of digital assets, industry executives said.
Company officials spoke after Binance at a high-profile Asian cryptocurrency conference in Singapore that began on Wednesday. US stock exchanges have laid off more than 100 workers as the US move erodes their businesses.
Added to this difficult context is the collapse of digital assets worth $2 trillion by 2021.
Among the attendees was former New York Stock Exchange president Tom Farley, chief executive of Gibraltar-listed digital asset exchange Bullish.
Bulls plan to apply for a license to set up a cryptocurrency data center in Hong Kong once a new regulatory framework is in place, Farley said.
“We chose not to do business in the United States,” he said. "We are licensed in many states. We can do it tomorrow. But the environment in the United States is not very favorable. It's disappointing."
Gary Gensler, chairman of the U.S. Securities and Exchange Commission, considers most tokens unregistered securities and has taken action against issuers and exchanges that do not register with the agency.
But conflicting court decisions on the issue have caused confusion in the United States, and Gensler, speaking before the Senate panel on Tuesday, reiterated his view that cryptocurrency is rife with fraud and abuse.
Meanwhile, Asia is implementing cryptocurrency regulations, exemplified by Hong Kong's first licenses to trading platforms under the new regulations last month.
Hong Kong, Singapore, Japan and South Korea are among the countries trying to create more stringent frameworks to protect investors, but they remain attractive to businesses – a difficult balance.
San Francisco-based crypto-payments firm Ripple Labs Inc. “I'm not worried about the severity,” said CEO Brad Garlinghouse, who is embroiled in legal disputes with the SEC.
"It's a lack of clarity. If you don't really know how to be a good actor, things get difficult."
The SEC sued Ripple in 2020 after the company failed to register the XRP token as collateral.
Earlier this month, Ripple opposed the SEC's request to challenge a court ruling that tokens are not securities when listed on an exchange.
“In countries like Singapore, Hong Kong, the United Kingdom and Dubai, governments work with industry and you see leadership, they set clear rules and you see progress,” Garlinghouse told Bloomberg Television.
He added that more than 80% of Ripple's hires this year will be made outside the United States.
In addition to Ripple, other notable SEC lawsuits include those against Binance and Coinbase, which the companies have contested.
The agency In 2022, failures and symbolic explosions such as the failure of the FTX stock exchange, its co-founder Sam Bankman-Fried stepped up action after his conviction in October.
“This is not a lack of transparency,” Gensler said earlier this year. “It's a fundamentally inconsistent industry and that's their business model.”
In recent months there have been signs of a slowdown in Asia.
For example, Wintermutt, a leader in digital asset markets, announced plans to relocate its staff to Singapore in July.
Huobi, OKX and Amber Group have announced plans to apply for a license in Hong Kong.
In Japan, banking giant Mitsubishi UFJ Financial Group is in talks with the companies behind popular global stablecoins and other companies.
The country's stablecoin law, the first of its kind in a major economy, went into effect on June 1.
“Japan is very interesting,” Wintermut CEO Yevgeny Gevoy said in an interview. "You'll see more transparency, you'll see positive developments from a fiscal perspective. Having a small office there can be important to serve colleagues in the area."
Of course, the cryptocurrency industry could quickly become the largest economy in the world as the United States implements increasingly clear regulations. The question is how long it might take.
“It will be controlled,” Jenny Johnson, chief executive of Franklin Templeton Investments, said on a panel at the Singapore conference. "Takes time."