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How Hong Kong bureaucracy works, and how it’s different from Singapore

July 28, 2017

At the START conference, I was totally flabbergasted at the work that the Monetary Authority of Singapore was doing putting the Singapore dollar onto the blockchain, and even more so how regulation in Singapore is just different from Hong Kong.  Basically, the MAS put all of the blockchain companies and banks in one room, and told them “you will talk with each other and come up with a blockchain solution”, the banks and blockchain companies met, and it was done.  But that’s how Singapore works.

It’s not how Hong Kong works.  It took me a few years of living here to figure this out but HK regulators and civil servants really aren’t in the “we’ll tell you want to do” business.  In most places, the government figures out what the policies are, and then they tell you.  One thing that I’ve found in working with the securities and banking regulators (and with the HK bureaucracy in general) is that most of the time with new technology, they aren’t sure themselves what to do, and so if you have a discussion with the HK regulators, it’s a matter of you telling them exactly what it is that you want from them.  And even when they tell you want they want to do, it turns out that sometimes they get the law wrong.  There have been a number of notable cases in which the SFC has asserted that they had a certain power, only to be corrected by a judge.

So when talking with the SFC and HKMA, it really is a “dialogue of equals”.  Once you understand the laws and regulations then when you are talking with the SFC and HKMA, you really have as much power as they do. I have my agenda, knowledge and understanding of the law.  They have their agenda, knowledge, and understanding of the law.  It turns out that doesn’t give them more power than me.

It’s very clearly not the case when you are discussing something with the MAS.  Having a discussion with the government when you realize that you have as much power as they do is a bizarre feeling.

The fact that Hong Kong has an extraordinarily weak government while Singapore has a very strong one has a number of consequences.  I was pretty amazed at the ability of the MAS to just say “do this” and it gets done.  By contrast, you look at the HKMA trying to get banks in Hong Kong to just open accounts for companies.  “Could you please, please open accounts for companies?”  “No!!!”  “OK.”

So one thing that I was thinking to myself when I was listening to the MAS, was that when it comes to putting the Singapore dollar onto the blockchain, the MAS is just light years ahead of the HKMA.  The other thing that I was thinking was that there is absolutely no way that the HKMA can do what Singapore did.  Leading and innovation is just not what the HK government is set up for.  The role of the HK government is just to provide the environment for someone else to provide leadership.  And that person can be me.  And if you want that person can be you.

One final thing.  One thing about the Singapore system is that it means that Singapore is a lot better at self-promotion than HK is.  The MAS is trying to promote Singapore as a fintech hub, and they do a very, very good job of it.  After hearing the talk by the MAS, I was *really* impressed by what they were getting done.  The thing about HK is that there isn’t a single government agency that is in charge of fintech promotion.  It’s split among several agencies.  One consequence of that is that at some of the talks, I was hearing people talk about how they were planning an ICO in Singapore because Singapore has better laws, when it turns out that HK has extremely favorable laws for this sort of thing.  However, there isn’t any single agency that can promote this, and so this falls on the private sector and stuff like this blog.

 

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