Asia’s competitiveness in the financial technology arena is being undermined by the rivalry between Hong Kong and Singapore, two of the top financial centres in the region, according to a financial lobby group.
The Asia Securities Industry and Financial Markets Association (ASIFMA) said in a report released on Friday that different governments, led by Hong Kong and Singapore, rushing to grab a slice of the US$100 billion global fintech pie is creating a regulatory maze which can make it hard for companies to scale up.
“The regulatory landscape is very fragmented and a lot of the initiatives, though well-intentioned, are not necessarily well thought through,” Mark Austen, ASIFMA chief executive, was quoted as saying by Reuters.
ASIFMA, which represents global banks and asset management firms such as Goldman Sachs and BlackRock, has urged better coordination among regulators of Asian markets and the adoption of a consistent set of best practices for developing fintech across the region.
Due to many fintechs’ innovative business models, regulators sometimes struggle to establish clear and consistent taxonomies and rules pertaining to their activities.
In one such example of the discord between regulatory regimes, cryptocurrency exchanges are licensed as money changers in Hong Kong and are under the jurisdiction of the customs authority. But in South Korea, they are considered online retailers, same as an online clothes store. Meanwhile, Singapore’s central bank has proposed classifying these exchanges as payment firms.
“By not cooperating on fintech, Asian financial centres are putting themselves at a real disadvantage relative to the rest of the world: that traditional competitive dynamic and rivalry between the likes of Hong Kong and Singapore may actually in this case be a disadvantage,” said Hannah Cassidy, partner at Herbert Smith Freehills in Hong Kong and a contributor to the ASIFMA report.
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