Hong Kong's highly-anticipated crypto licensing regime is expected to launch next month.
Vying to become a crypto hub, Hong Kong will release the final guidelines for crypto exchanges looking to launch there in May, according to Hong Kong's Securities and Futures Commission (SFC) CEO Julia Leung.
Speaking Thursday at a Bloomberg event on Thursday, Leung said the regulatory framework for crypto exchanges received over 150 responses during the public consultation process.
The public consultations launched last year sought to determine the best way to grant retail investors access to cryptocurrencies, as well as examine the possibility of offering crypto exchange-traded funds (ETFs) in the territory.
The new rules are also expected to let retail investors trade major cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) on June 1.
Hong Kong To Conduct Public Consultation on Retail Crypto Trading, ETFs
Hong Kong’s Securities and Futures Commission is set to conduct a public consultation on how to give retail investors access to digital assets. Though crypto exchanges are allowed to operate in the territory under current rules, access is limited to investors with portfolios of at least HK$8 million ($1 million). In addition, Hong Kong’s regulator said it is open to future reviews on property rights for tokenized assets and the legality of smart contracts, and that it is exploring a number of pi...
While crypto exchanges are currently permitted to operate in Hong Kong, investors with portfolios under HK$8 million, or roughly $1 million, are subject to certain restrictions under existing legislation.
The regulator is also conducting several pilot projects to assess the advantages of digital assets and their applications in financial markets, including the tokenization of green bonds and the development of Hong Kong's own central bank digital currency (CBDC).
The SFC did not immediately respond to Decrypt's request for comment.
Hong Kong seeks to become Asia’s leading crypto hub
Despite Hong Kong's efforts to adopt a more relaxed approach towards cryptocurrencies, questions remain over the impact it may have on the industry's relationship with mainland China, where cryptocurrency trading and Bitcoin mining were first banned in 2017.
BitMEX founder and former CEO Arthur Hayes also chimed in on the matter last year, stating that access to Chinese customers will be essential to Hong Kong's appeal to crypto companies.
gm: Arthur Hayes Says Crypto Failures Are A Sign of The System Cleansing Itself
Arthur Hayes says the speed at which projects like Terra grow and implode is a feature of the crypto industry, not a bug. He founded crypto exchange Bitmex in 2014 and then became the original crypto bad boy. In 2021 the DOJ charged him in with violating the U.S. Bank Secrecy Act for not implementing an anti-money laundering program at Bitmex. He plead guilty and was sentenced to two years probation and six months of home detention. In fact, he was still sporting an ankle bracelet on a recent cover of New York Magazine. Now he's living in Singapore, offering up his views on the crypto industry with long form, meme-filled essays, and still thinks the crypto industry will save investors from what he calls a broken banking system. "I don't care if you're capitalist or you're a communist. Everybody put on a lot of debt. We've passed the point where that debt is becoming useful," he said. "And therefore everyone is going to take an L unless they get some crypto or some gold—some hard asset that's outside of the traditional banking system."
"Hong Kong’s position as the most important crypto hub began to tumble gradually at first, and then quickly with the imposition of its zero-COVID policies. But now, it looks like something curious is happening," he wrote, adding that "it is the ordinary wealthy Chinese people that power the Hong Kong economy."
Hong Kong’s authorities appear to be confident that their efforts will pay off, too.
“Hong Kong is well-positioned to be a leading hub for Web3 in Asia and beyond, and we attach great importance to virtual assets and Web3,” Secretary for Financial Services and the Treasury Christopher Hui said last month.
Hong Kong Is Vying To Be The Next Crypto Hub
It has been almost a year since your favorite China watcher wrote anything meaningful about the Chinese crypto community. The truth of the matter is that China’s covid lockdown made it difficult for anyone who’s not living in Asia to truly understand its market, people, and overall sentiment. So I was surprised to feel the pro-crypto excitement at last week’s “Web3 Festival” in Hong Kong. The big news was a major policy announcement from the Hong Kong government, indicating its desire to make...
According to Hui, Hong Kong had received interest from over 80 companies seeking to establish a business there. These included exchanges, blockchain infrastructure firms, security companies, wallets, and payment providers.
Nikkei Asia also reported last month that several Chinese crypto companies, including securities companies and banks that are interested in allowing clients to trade Bitcoin and Ethereum on licensed exchanges, are eying Hong Kong.
Cryptocurrency exchange Bitget has meanwhile announced the launch of a new trading platform for its Hong Kong users. According to last week’s statement, BitgetX Hong Kong intends to apply for the license under the Hong Kong Virtual Asset Service Provider (VASP) regime.
