FTX Wipeout Is Latest Test of Nerves for Asia’s Crypto Rule Makers
Crypto's latest existential crisis, courtesy of Sam Bankman-Fried's epic faceplant, flared amid far-reaching planned changes in the digital-asset rulebooks of Asian centers including Hong Kong and Singapore.
The fall of his FTX exchange showed the world lacked the true picture of its operations. As a result, officials in both jurisdictions and further afield face calls to ensure greater transparency, especially on customer assets.
The immediate focus in Asia is on “disclosures of leverage ratios, any conflict of interest with user funds, details of those funds and risk management,” said Cici Lu, founder at Venn Link Partners, a digital-asset consultancy.
For now, Hong Kong and Singapore are sticking with diverging regulatory paths. Hong Kong two weeks ago pivoted to a more welcoming stance, detailing plans to become a crypto hub with legalized retail trading and dedicated exchange-traded funds. Singapore, in contrast, is clamping down on retail crypto trading, focusing instead on productive applications of blockchain technology.
Hong Kong Financial Secretary Paul Chan in a Sunday blog post indirectly referenced FTX's Nov. 11 slide into bankruptcy while adding that the industry is “full of hope” for the city's virtual-asset market.
He argued that's because Hong Kong is on course for a rule book that delivers the transparency, compliance and investor protection needed to tackle the risks writ large by the so-called crypto winter.
Hong Kong's Securities & Futures Commission has said the exposure of local licensed entities to FTX is “non-material.”
Singapore argues FTX's woes affirm the city-state's focus on consumer safeguards such as a proposed ban on leveraged token purchases by mom-and-pop investors.
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