Interview with Di Zheng: Can Hong Kong Overtake Singapore as the Web3 Hub of Asia?

In this episode, we sit down with Di Zheng, a widely respected and highly regarded analyst with a strong track record at major securities firms across China, Hong Kong, and Singapore. Known for his deep insights into the development of the Web3 industry, Zheng brings a unique perspective shaped by years of hands-on experience.

In recent years, Hong Kong has emerged as a rising force in the crypto space, thanks to its open regulatory stance and strategic industry positioning. As Singapore tightens its crypto regulations, many professionals — particularly those from centralized exchanges or with Chinese backgrounds who have struggled to obtain licenses — are shifting their focus to Hong Kong.

At the same time, skepticism remains. Critics argue that Hong Kong lacks the conditions to serve as a true Web3 hub, especially given the uncertainty around mainland China’s policy shifts. Yet this turbulence has only heightened interest in Hong Kong’s role in the rise of stablecoins and real-world asset (RWA) tokenization.

Currently based in Singapore but frequently traveling between the two cities, Zheng offers an informed, on-the-ground comparison of both regulatory environments. In this episode, he dives into the nuanced differences between Hong Kong and Singapore’s approaches to Web3, examines whether Hong Kong can truly take the lead, and unpacks key trends in the stablecoin space, the evolving regulatory landscape around tokenized stocks, and the contrasting paths of RWA development in China and the U.S.

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Regulatory Attitudes: How Hong Kong and Singapore Are Shaping the Web3 Race

Colin: To start, can you share why you believe Hong Kong is poised to become the next Web3 hub? Are we talking about a regional center, or something more global?

Zheng: Thanks, Colin. Hello everyone, it’s a pleasure to be here again to talk about this important topic.

I believe Singapore’s tightening regulations are largely driven by international pressure — particularly from the Financial Action Task Force (FATF). FATF mandates that all member countries regulate virtual asset service providers (VASPs) registered within their jurisdiction, even if those providers serve clients outside the country. Singapore’s recent moves, including the push for DTSP licenses, are clearly in response to this.

In fact, Singapore announced this shift as early as 2022. But many in the industry either weren’t fully aware, assumed there’d be a grace period, or underestimated the difficulty of obtaining a license. So when the government confirmed full enforcement by June 30, 2025 — with no transition period — it caught many off guard and triggered an exodus of crypto businesses.

Smaller exchanges leaving wasn’t surprising. What shocked me was that even a licensed, publicly listed platform that holds a license in Hong Kong and was well-known in Singapore had to exit due to license denial. This shows how unwilling Singapore is to continue accommodating this sector.

That said, Hong Kong isn’t free from regulatory scrutiny either — it’s also an FATF member and subject to evaluations. Singapore just happened to undergo its evaluation first, so the pressure hit earlier. Failing to act could land it on FATF’s greylist or even blacklist, which would damage its status as a global financial hub.

In contrast, Hong Kong has fewer options. In recent years, many firms — including state-backed Chinese companies — chose Singapore as their offshore base. For Singapore, even without Web3, it still has AI and other sectors to fall back on. It doesn’t have the same urgency to embrace Web3.

But Hong Kong is in a different position. A few years ago, it was dubbed a “financial ghost town.” It needed a new growth narrative, and Web3 became the chosen frontier. Meanwhile, Singapore’s sovereign wealth funds took major losses in the Web3 and NFT space, which soured public perception of the industry.

Singapore has publicly stated it won’t issue many DTSP licenses. Part of the reasoning is that Web3 hasn’t contributed much to local jobs or tax revenue — many workers are paid in stablecoins and report little income. There’s also local resentment over rising living costs attributed to the crypto crowd. And with elections coming in 2025, cracking down aligns with public sentiment.

So rather than confront the sector directly, Singapore is limiting its presence through license caps — effectively pushing it out. Hong Kong, on the other hand, doesn’t have many alternatives. Faced with similar international pressure, it has opted for a more flexible approach, offering transition periods and clear licensing guidance.

In the end, both cities are reacting to the same global regulatory trends. But their vastly different industrial structures and strategic priorities are driving very different responses to Web3.

Hong Kong’s Evolving Role: From Greater China to a Global Web3 Hub?

Colin: Zheng, you’ve clearly explained Singapore’s current situation and its regulatory shift. Let’s now turn to Hong Kong. Do you see it more as a Web3 hub for Greater China, or does it have the potential to become the regional — or even global — center?

Zheng: Until recently, I would have said Hong Kong was mainly a Web3 hub for Greater China, largely supported by mainland policy. The growth of Web3 in Hong Kong was seen as a government-driven initiative, and many in the industry were skeptical of projects moving to Cyberport or Hong Kong in general.

But here’s the question: can we really assume that China’s stance on Web3 will remain unchanged forever? In this space, many Chinese — especially East Asian — builders carry a sense of “shame” because crypto is still discouraged on the mainland. Hong Kong has become a marginal, tolerated space without clear regulatory support.

Meanwhile, the U.S. is actively shaping the rules for this industry. Since Trump’s return to the political stage, there’s been a push for more crypto-friendly regulation. A recent example is the GENIUS Act passed by the House. Though the Senate version hasn’t been finalized and there’s no strong extraterritorial enforcement yet, the message is clear: if foreign stablecoin issuers don’t align with U.S. standards, they’ll be shut out of its crypto financial system.

This is prompting jurisdictions like Hong Kong to seek regulatory alignment with the U.S., aiming for mutual recognition and access to American markets. In this sense, Hong Kong — despite all its efforts — is still playing an away game.

That said, something changed in April this year. One significant moment was when the CNH stablecoin, jointly launched by Conflux and Hony Capital, made the front page of Jiefang Daily, an official Chinese newspaper. That’s a meaningful signal. Local governments like Shanghai’s SASAC and Wuxi are also exploring stablecoins, and the Lujiazui Forum on June 18 sent positive regulatory signals.

These developments suggest a subtle policy shift in mainland China. As a result, Hong Kong’s role is expanding beyond Greater China. It’s now positioning itself as a potential Asian Web3 hub. Even without direct access to mainland markets, the overseas operations of Chinese banks and companies give Hong Kong a strong foundation.

On a global level, China has long struggled to gain pricing power in financial markets, even while competing fiercely with the U.S. in trade, tariffs, and technology. Financial rules are still set by the West. But we are now at a pivotal moment — SWIFT is undergoing a transformation, and the U.S. is rushing to patch vulnerabilities and secure its lead in the emerging on-chain financial order.

The GENIUS Act reflects America’s intent to dominate this space. But it also presents China with a once-in-a-generation opportunity. If it moves swiftly before the new infrastructure is fully locked down, it could gain meaningful influence in shaping the next global financial architecture.

On-chain finance isn’t built by any single country — it’s the result of over a decade of global collaboration among users, builders, and investors. The U.S. excels at setting the rules to control systems indirectly. If China joins that rule-making process, it could become a true counterweight.

If China adopts more favorable policies now — encouraging domestic firms to participate in stablecoins, RWAs, and STOs — Hong Kong could move beyond Asia and become a global Web3 center alongside cities like New York.

From an offshore finance perspective, the Global South — 30 to 50 countries with capital controls or unstable currencies — is the most practical market for on-chain finance. If China can capture that market, it would gain a major edge in stablecoin usage and digital asset trading.

In short, this is China’s policy window. If it seizes the moment, the next 3–5 years could see China co-defining the global crypto-financial order. If not, the opportunity could close quickly.

That’s why I believe Hong Kong has already emerged as the Web3 center of Asia — and with the right strategic moves from Beijing, it has a real shot at becoming a global hub.

Hong Kong’s Stablecoin License Race: USDT’s Dominance and a Regulatory Window

Colin: In Hong Kong, there’s growing concern that USDT already dominates the Global South market. If Hong Kong were to launch a new stablecoin — whether pegged to RMB or HKD — would it really be realistic to compete with USDT? And on the mainland, especially in Beijing, policy signals remain ambiguous. Past reversals make it unclear if this ever rises to a national priority.

Di Zheng: You’re right — and before the House passed the GENIUS Act, I shared that perspective. USDT is a behemoth; it’s nearly unbeatable in offshore markets. But after the House approval and Trump’s signature, Tether now faces a three-year compliance period.

Tether’s CEO says they’ll launch a fully compliant stablecoin registered in the U.S. — targeting institutional, high-speed, transparent payment use cases. Meanwhile, USDT will be treated as a “foreign issuer,” aiming to maintain access to the Western crypto financial system.

This transition requires major adjustments: reserve restructuring, FATF-aligned KYC/AML systems, blacklisting mechanisms, and more. The days of outsized yields are likely over. While USDT could keep earning during the compliance period, in three years it must meet full compliance.

That three-year window creates openings — an opportunity for offshore stablecoins to gain traction. The stablecoin market is now heading toward intense competition.

If I were Jeremy Allaire (co-founder and CEO of Circle), I wouldn’t actually want Tether to be pushed too hard. Right now, USDT dominates the Global South; Circle’s USDC targets the U.S. and institutional clients. USDT’s compliance journey would bring it directly into Circle’s domain. This dynamic would change the market structure entirely.

Once USDT becomes fully regulated, offshore markets will open up for other players like DAI and Ethena. These “third- and fourth-place” stablecoins may finally scale.

Recently, Coinbase suffered a data breach, with hackers stealing $300–$400 million worth of crypto, swapping it into DAI. Those funds couldn’t be frozen. That’s a key difference — if they’d used USDT or USDC, freezing would be possible; DAI, being truly decentralized, can’t be controlled. This highlights the gaps in the offshore stablecoin space.

Still, DAI, Ethena, and other algorithmic or crypto-backed stablecoins won’t qualify under the GENIUS Act. Western exchanges will likely reject them. Even so, the cracks left during USDT’s compliance transition give others room to expand.

Could a Hong Kong-based stablecoin — like a CNH-backed token — seize this opportunity? It’s hard to say, but the potential window is real.

Hong Kong also faces internal challenges. While some domestic policymakers support growing Hong Kong’s Web3 ecosystem, conservative factions stand ready to criticize any misstep. The HKMA is treading carefully — balancing both domestic concerns and FATF compliance requirements. Maintaining international financial hub status demands alignment with Western KYC and AML standards.

Singapore, by contrast, chose full compliance — even at the cost of heavily curtailing its Web3 industry. They may argue they’re only cracking down on “non-compliant actors,” but the effect has been broad suppression.

In that approach, Singapore parallels Shanghai’s Zhangjiang Hi‑Tech Park, which favored large multinational companies and overlooked local smaller innovators. Zhangjiang lost the opportunity to become China’s innovation drug hub when it failed to embrace returning biotech entrepreneurs — SuZhou took the lead.

Hong Kong doesn’t have the luxury of choice — it must support Web3 while managing FATF and international scrutiny.

Recently, public enthusiasm around stablecoins seems to be cooling. The HKMA now reportedly operates via an “invitation-only” application process, extending stability token license access only to selected entities it invites directly.

Moreover, future stablecoin models may not resemble USDT or USDC with unconstrained on-chain transfers. Instead, Hong Kong may implement a more controlled model — such as whitelist-based token transfers similar to TMMF (tokenized money market funds).

Much remains to be seen post-August policy rollout. But clearly, the HKMA is more cautious than before. Hong Kong now faces a complex balancing act between internal expectations and external regulatory pressure.

How Hong Kong Handles Offshore Crypto: Balancing Regulation and Industry Growth

Colin: Singapore has taken a unique approach recently. If you’re a company registered there but only serving overseas users — not locals — they’ve become increasingly hostile. This is especially relevant in crypto, where many players operate offshore, from centralized exchanges to DeFi products. Singapore now rejects that model. Do you think Hong Kong might eventually follow suit? So far, it seems more tolerant.

Zheng: Yes, the key here is FATF pressure. Singapore faced it earlier than Hong Kong, and Hong Kong will have its turn. But right now, Hong Kong clearly wants to preserve its Web3 sector — that’s a big contrast with Singapore.

Singapore’s approach favors large corporates. Licenses go to big exchanges, major market makers — if you’re not big enough, you’re likely pushed out. Hong Kong, in contrast, values small and mid-sized firms and recognizes that innovation often comes from them. The U.S. follows a similar logic. Singapore has more options — it doesn’t need to rely on scrappy Web3 startups. Many Chinese firms have made Singapore their first stop in going global, and Singapore can afford to be selective.

But I believe Web3 is a critical long-term industry. As a senior USD fund partner once told me, “In the future, the only two sectors worth watching are AI and Web3. These are the deepest, longest runs. Everything else is a distraction.”

So I do think Singapore’s government may come to regret its decision in a few years. FATF pressure is global — Hong Kong won’t stay lenient forever — but how a government responds matters. For instance, will it allow a grace period or suddenly impose a “regulatory cliff”? That makes a big difference.

Take licensing — are you encouraging people to apply, or are you creating barriers that basically say, “Don’t bother”? The ease and transparency of the process signal a region’s stance.

So far, Hong Kong hasn’t cracked down on offshore exchanges, DEXs, or other platforms serving non-local users. That may change, but the key difference is this: Hong Kong might invite them to apply for licenses — actively court them, even. Singapore, by contrast, simply says “no thanks.”

Singapore issued a few licenses to major players — big exchanges, top market makers, and stablecoin issuers — and then stopped. It doesn’t view Web3 as a strategic industry. But Hong Kong doesn’t have that luxury. Web3 may be its only shot at long-term relevance.

So, when both regions face the same FATF scrutiny, they adopt radically different strategies.

That said, Hong Kong is tightening up too. In the past, many small OTC shops in Hong Kong used customs MSO licenses and company registry trust licenses to operate in a regulatory gray zone.

Now, the Hong Kong SFC has introduced the VA OTC license and opened public consultation. The comment period ends in August. Based on the draft rules, if implemented as-is, most OTC shops in Hong Kong would have to shut down.

This move aims to plug one of the biggest AML loopholes in Hong Kong’s Web3 ecosystem.

The new rules require even the smallest OTC shops — chain or standalone — to employ two Responsible Officers (ROs) with crypto experience. These professionals are in short supply, let alone two per shop. They also need minimum registered capital of HK$5 million, including at least HK$3 million in cash and enough to cover 12 months of operating costs. If operating costs exceed that, they must hold additional reserves.

These thresholds are far too high for mom-and-pop OTC shops — many will simply exit.

So while Singapore takes the “clean sweep” approach, Hong Kong raises the bar and steers the industry toward compliance.

In short, both regions face the same global regulatory headwinds — but their attitudes and strategies diverge sharply. Hong Kong is still trying to strike a balance between regulation and industry development.

The Global Tokenized Stock Boom: Regulatory Hurdles and Hong Kong’s Structural Roadblocks

Colin: Let’s move on to another hot topic — RWA (Real World Assets) and tokenized stocks. This area is booming in the U.S., with new startups emerging, such as Kraken’s partnership with xStocks. Robinhood’s entry into the pre-IPO tokenization space has drawn a lot of attention. Since tokenized equity is one of your specialties, I’d love your take. Here in Hong Kong, however, there seem to be some deep-rooted structural issues. When we spoke with Hong Kong Legislative Council member Duncan Chiu and also observed discussions led by Xiao Feng (Chairman and CEO of HashKey Group), both pointed out that outdated post-crash regulations only allow HKEX to handle Hong Kong-listed stocks — essentially blocking any path to stock tokenization. What’s your outlook for tokenized equity and RWA development in Hong Kong?

Zheng: Yes, right now there are essentially three models for tokenized stocks: Robinhood, Gemini in partnership with Dinari, and Kraken with xStocks.

Robinhood’s approach is fully compliant and airtight — but it’s not true tokenized equity, at least not in the first phase. What they’re offering is a centralized CFD (contract for difference) product, licensed through MiFID in Lithuania. It’s strictly off-chain and only tradable within the platform.

By contrast, Dinari and Kraken offer tokens that can be transferred 1:1 on-chain. Robinhood’s product is more like a synthetic proxy without any actual linkage to stock holdings. Yes, Robinhood does hold real shares in the U.S., but those aren’t used as collateral for the CFDs. That distinction is important — no 1:1 mapping means lighter regulatory scrutiny. Robinhood can argue that it’s simply taking the other side of the trade and holding shares for hedging, not as backing for the product. That’s why their setup is relatively low-risk in terms of regulation.

Dinari and Kraken face trickier challenges. While they conduct KYC within their platforms, once tokens are transferred on-chain, they lose control. Technically, U.S. users are geo-blocked, but blockchain is permissionless. There’s no way to prevent someone from bypassing restrictions and violating SEC tax laws. That’s a real regulatory gap.

SEC Commissioner Hester Peirce — aka “Crypto Mom” — has said even tokens representing only economic rights (no voting power) still count as securities. If you offer them to retail investors, the trading must occur on a licensed national securities exchange — like Nasdaq or NYSE. Coinbase doesn’t qualify.

If trading happens on-chain, it must be restricted to accredited investors. That’s very similar to Hong Kong’s situation. Regulations introduced after the market crash effectively gave HKEX a monopoly on stock trading. Whether on-chain or not, equity transactions can only happen on that exchange — killing any chance of tokenized equity in the current setup.

However, there’s a recent development: SEC Chairman Paul Atkins is reportedly considering a limited exemption for on-chain stock tokenization. If that exemption goes through, it would be a game-changer. Both Coinbase and Gemini (via Dinari) are in discussions with the SEC. Without an exemption, Peirce’s comments basically mean “game over” — even the industry’s friendliest commissioner is skeptical.

But if Atkins pushes it through, it could spark a domino effect. Would other regulators follow the SEC’s lead? We don’t know yet, but any regulatory loosening by the U.S. would open the floodgates for global adoption. That could be a massive leap forward.

Europe is watching closely too. If the SEC bans on-chain trading of tokenized stocks, EU regulators could cite that as a reason to oppose what Gemini and Kraken are doing — especially since on-chain withdrawals raise complex cross-border issues.

I used to be quite pessimistic. But this possible shift by the SEC gives me hope. Everything now hinges on whether the exemption happens — and what the terms are.

Robinhood’s current model — CFDs plus real-stock hedging — is compliant and safe, but not on-chain. They clearly want to move into phase two: actual tokenized equity on-chain. That path depends entirely on what Atkins does next.

So in summary, tokenized equity is at a regulatory tipping point. If the U.S. relaxes rules, the next question is whether Hong Kong can reform in parallel and break free from HKEX’s institutional lock. It’s definitely worth watching.

The Rise of RWA: Diverging Paths in Hong Kong and the U.S., and Future Opportunities

Colin: Let’s dive into the topic of RWA (Real World Assets), especially in the context of Hong Kong. Since you’re actively working in this space, what do you see as the most promising opportunities?

Zheng: There’s a stark difference between how RWAs are developing in the U.S. and Hong Kong. Globally, especially in English-speaking markets, the dominant RWA category isn’t money market funds — it’s actually private credit. These private debt instruments don’t require daily mark-to-market pricing, making them more stable and attractive to macro hedge funds and fixed-income managers. As long as they don’t default, they can generate predictable returns, which may explain why they’ve become the largest segment of RWAs.

In the U.S., government bonds and money market funds are the main assets being tokenized. So far, around $7.3 billion in tokenized money market funds have been issued globally — BlackRock’s BUIDL alone accounts for $2.8 billion. In contrast, tokenized non-standard assets like real estate and infrastructure exist but remain niche.

Interestingly, in Hong Kong, non-standard assets may actually dominate the RWA landscape. The Hong Kong government’s Web3 policy document (2.0 version) includes support for projects like solar panels and EV charging stations — types of assets rarely seen in U.S. tokenization strategies. This highlights a clear divergence in approach.

Despite the differences, the broader narrative is the same: “tokenize everything.” Michael Saylor, co-founder of MicroStrategy, recently told the SEC that excluding Bitcoin, tokenized assets could expand from $1 trillion to $590 trillion in market cap. This massive potential underpins current market enthusiasm for ETH, Solana, and their respective ecosystems.

That said, both Hong Kong and the U.S. face a common challenge: secondary market liquidity. In Hong Kong, RWA tokens can’t be freely transferred on secondary markets. Even if tokenization is done properly, lack of liquidity means the value can’t be realized. This is especially true when assets are structured through BVI or Cayman funds — whether onshore or offshore — and then tokenized. For onshore Chinese assets to be monetized overseas, QDLP (Qualified Domestic Limited Partnership) quotas are still required.

Solving the liquidity issue could unlock massive value. Many institutions are actively exploring solutions. In the U.S., some tokenized money market funds are already being traded via whitelisted on-chain mechanisms, although adoption remains limited. If this scales, it will mark a major milestone for the tokenization movement.

Hong Kong, for its part, is now focused on enabling tokenized money market funds (TMMFs) to be transferred on-chain — specifically within licensed exchanges like HashKey Pro, limited to professional investor zones. If successful, it would be the world’s first regulatory-compliant transfer of such assets and a major breakthrough.

However, investor protection remains a concern. If an RWA token is sent to the wrong address or hacked, there’s currently no compensation framework in place. Finding a way to insure such risks is key before regulators can move forward confidently.

Still, the direction is clear: everything is moving on-chain. The SEC also recognizes that current STO (Security Token Offering) rules are too complex and is working on simplification. SEC Chairman Paul Atkins has noted that the Trump administration tasked the agency with turning the U.S. into a global crypto hub. But if retail participation isn’t feasible, the whole strategy falls apart. So far, only four STOs have been approved under the Reg A framework — evidence of just how cumbersome the process remains.

The SEC’s goal now is to develop a streamlined, low-barrier STO pathway. Michael Saylor has stressed that if the U.S. wants to lead the digital economy, it must remove regulatory roadblocks and scale the market from $1 trillion to $590 trillion. Major developments could happen in the next two to three years — possibly as early as next year.

When that happens, the key question will be whether Hong Kong follows suit. I believe the technology is ready; the real bottleneck is regulation. The future will depend on finding innovative solutions to break through policy barriers.

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