Hong Kong's Crypto Crown Slipping to 'Aggressive' UAE

Joseph Chan, Hong Kong's treasury undersecretary, stood confident at Consensus Hong Kong 2026: "Our regulation is transparent, certain and predictable." But sharing the same stage, Johnny Ng from Goldford Group delivered a sobering reality check: "The UAE is really aggressive."

This moment captured Hong Kong's current dilemma—caught between its methodical approach and the UAE's rapid-fire crypto expansion.

The Numbers Don't Lie

Hong Kong's mandatory licensing regime for virtual asset trading platforms launched 2.5 years ago, yet only 11 licensees have been approved. Meanwhile, Dubai and Abu Dhabi each operate under single, dedicated regulatory authorities that promise faster approvals and clearer frameworks.

The stablecoin regulatory regime, which kicked off last August, is targeting its first batch of licenses for Q1 2026—nearly a year after implementation. Digital asset dealer and custodian licenses remain in the consultation phase, with no clear timeline for legislative tabling.

The 'No Surprises' Philosophy Under Pressure

Chan defended Hong Kong's deliberate pace: "It sounds like a long process, but it's very important. 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."

But Ng, a member of China's National Committee since 2018, sees this differently. "Hong Kong's legislative council can recommend that the government do more, particularly by creating one position to oversee all those things," he said, pointing to Korea's dedicated government body for crypto issues as a model.

Speed vs. Stability Trade-off

The UAE's approach contrasts sharply with Hong Kong's multi-layered system. Dubai's DFSA and Abu Dhabi's ADGM operate as unified authorities, eliminating the jurisdictional complexity that Hong Kong's framework inherently carries. Korea, with its millions of crypto users, has similarly streamlined oversight under specific government departments.

Chan emphasized Hong Kong's consistency: "Be it during a crypto winter or not, Hong Kong has stood by the development of the digital asset industry. If you look at other jurisdictions... they might flip-flop." Yet this stability argument rings hollow when competitors are gaining ground through decisive action.

The Institutional Money Factor

With BlackRock executives suggesting that just 1% crypto allocation in Asia could unlock $2 trillion in new flows, the stakes for regional crypto hubs have never been higher. Hong Kong's measured approach may appeal to traditional institutions seeking regulatory certainty, but it risks losing the dynamic fintech companies that drive innovation.

The city's "no surprises" promise becomes less attractive when the surprise is being left behind in a rapidly evolving market.