Hong Kong Acknowledges Regulatory Challenge from 'Aggressive' UAE in Digital Asset Race

Hong Kong's commitment to becoming a global digital asset hub faces mounting pressure from the United Arab Emirates, as regulators and lawmakers acknowledge the competitive landscape at Consensus Hong Kong.

Key government officials and industry leaders gathered at the conference to discuss the special administrative region's position in the global cryptocurrency ecosystem, with frank assessments of how rival jurisdictions are advancing their regulatory frameworks.

UAE's Unified Approach Draws Attention

"The UAE is really aggressive," Ng stated during the panel discussion.

He highlighted how Dubai and Abu Dhabi have each established comprehensive regulatory frameworks for virtual assets, with both emirates consolidating oversight under single, dedicated regulatory authorities. This streamlined approach contrasts with Hong Kong's current multi-agency structure.

Johnny Ng also pointed to South Korea as another model worth examining. The country, home to millions of cryptocurrency users and investors, has established a specific government body dedicated solely to crypto-related matters.

"I think Hong Kong's legislative council can recommend that the government do more, particularly by creating one position to oversee all those things," Ng explained. "As a lawmaker, I will actually help the government to connect with congressmen from other countries, for example, Korea."

Ng also pointed to South Korea as another model worth examining. The country, home to millions of cryptocurrency users and investors, has established a specific government body dedicated solely to crypto-related matters.

Hong Kong Defends Its "No Surprises" Philosophy

Joseph Chan, under secretary for financial services and the treasury in Hong Kong, defended the territory's approach by emphasizing regulatory consistency and predictability.

"Our regulation is transparent, certain and predictable, and we have stuck to that all along," Chan said. "This compares with some other jurisdictions, without naming any names."

Chan stressed that Hong Kong has maintained its commitment to digital assets regardless of market conditions—a pointed reference to jurisdictions that have shifted their stance during cryptocurrency market downturns.

"Be it during a crypto winter or not, Hong Kong has stood by the development of the digital asset industry," he added. "If you look at other jurisdictions, as things change and there are ups and downs, they might flip-flop."

Licensing Progress and Future Roadmap

Hong Kong's mandatory licensing regime for virtual asset trading platforms (VATPs) has made tangible progress since its implementation two and a half years ago. To date, 11 licensees have been granted approval under this framework.

The stablecoin regulatory regime, which launched in August of last year, is advancing on schedule. Chan indicated that the first batch of stablecoin licenses is targeted for issuance during the first quarter of this year.

Looking ahead, the licensing regime for digital asset dealers and custodians represents the next regulatory milestone. Chan expects Hong Kong's financial secretary to table this framework later this year, though it requires multiple consultations and bill readings beforehand.

"It sounds like a long process, but it's very important," Chan explained. "Because it means everyone from the industry knows what's coming, there is enough time to raise your concerns, so there will be no surprises and everybody knows what's going to happen next."

Coinasity's Take

Hong Kong's acknowledgment of competitive pressure from the UAE signals a maturing understanding of the global regulatory race for digital assets. While the territory's deliberate, consultative approach offers stability—a genuine asset in the volatile crypto industry—the UAE's aggressive, unified regulatory model appears to be capturing market attention and potentially market share. The question isn't whether Hong Kong's "no surprises" philosophy has value, but whether methodical predictability can compete with the speed and clarity that consolidated regulatory authorities provide. As both jurisdictions vie for dominance in the digital asset space, Hong Kong may need to accelerate its timeline without sacrificing the transparency that Chan champions. The proposed single oversight position that Ng suggests could represent the best of both approaches: maintaining regulatory rigor while streamlining decision-making processes.