Two countries have recently emerged as the new Meccas for token sales following bans in China and South Korea. The number of initial coin offerings in Singapore and Hong Kong has skyrocketed in recent months, as companies seek a favorable environment to raise funds outside their home countries.
New Meccas for ICOs
With some countries cracking down on token sales, Hong Kong and Singapore have attracted companies seeking to raise funds through initial coin offerings (ICOs).
According to Fintech businesses, lawyers, and industry groups, the number of companies launching ICOs in Singapore and Hong Kong “has skyrocketed in recent months,” South China Morning Post reported on Monday. The news outlet then quoted Anson Zeall, chairman of the Association of Cryptocurrency Enterprises and Startups Singapore, noting:
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.
He and others believe that this is partly due to China’s crackdown on ICOs. “In September, Beijing defined an ICO as an illegal fundraising tool after concerns over financial scams and money laundering. Dozens of ICO platforms in the country have since shut down,” the publication recalled.
While China cracked down on cryptocurrencies and ICOs, Hong Kong remains open to them and has seen significant growth in the number of token sales.
Neither Hong Kong nor Singapore currently has specific rules for ICOs. Lawyers and ICO issuers in both cities reiterated to the news outlet that raising funds through digital tokens remains loosely regulated there.
ICOs Moved Out of China
When China mandated domestic ICO issuers to refund investors and stop any new fundraising activities, many of them moved abroad.
Daisy Wu is among those whose companies have turned to Singapore shortly after Beijing’s ban. “We wanted to avoid legal risks,” she was quoted. Her company, the Beijing-based Xender, is now trying to raise US$10 million through an ICO for a file-sharing service, the news outlet detailed. Wu confirmed:
Many Chinese companies have gone to Singapore for ICOs…We all want to play it safe.
Ben Yates, a lawyer with RPC specializing in fintech and cyber law, said that he has seen significant growth in ICO-related inquiries since September, elaborating:
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.
Korean Fever & Bithumb’s ICO
South Korea also banned ICOs in September of last year, forcing local issuers to look elsewhere. They have also reportedly poured into Hong Kong and Singapore recently.
“Some argue that there is no legal basis for an ICO ban in Korea, but the authorities say that current laws alone are sufficient,” Money Today Network noted.
Earlier this month, news.Bitcoin.com reported that corporations in South Korea are attempting to bypass regulations using subsidiaries overseas to launch their ICOs.
Last week, local media reported that Bithumb, one of South Korea’s largest crypto exchanges, is planning to launch a “Bithumb Coin” ICO through a Singaporean corporation. Another South Korean startup, Zikto, is also reportedly preparing an ICO in Singapore.
What do you think of Hong Kong and Singapore as the hubs for ICOs? Let us know in the comments section below.
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