As a special administrative region of China, Hong Kong enjoys a rather special status in terms of governance. According to the latest news from the city, its leaders want to take a different approach from China when it comes to the regulation of cryptocurrencies.
Unlike in mainland China where the use and exchange of cryptocurrencies are completely banned, Hong Kong intends to regain its position as a global cryptocurrency hub. With this in mind, city lawmakers have launched several legal initiatives related to the cryptocurrency industry.
New bill to include cryptocurrencies in Hong Kong’s financial sector
Among the many projects on the agenda of the Hong Kong parliament is brand new legislation related to cryptocurrencies. It basically brings together a set of regulations whose role will be to regulate the crypto space in Hong Kong.
The main objective of this new law is to set up a licensing regime for crypto service providers. At the same time, they also made amendments to certain financial laws in order to better manage the market for cryptocurrencies in the city.
These new regulations were presented to the members of the Legislative Council of the special administrative region of China. For the authors of the bill, it is imperative that the cryptocurrency market is regulated if he really wants to grow.
Thus, within the laws that they had to propose, there is a rule that will make it compulsory to obtain a license for virtual asset service providers as well as a registration for traders specializing in the sale of precious metals and stones.
Because of this, any business that wants to launch a cryptocurrency exchange in the region will need to obtain a license in addition to fulfilling a number of requirements. The license will be issued by the Securities and Futures Commission (SFC) de Hong Kong.
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Regulation of the crypto market: Is Hong Kong ready to change position?
While it is true that Hong Kong has always been a land conducive to the use and development of crypto-currencies, it changed position a few years ago.
The SFC of the Chinese special region had adopted a rather ambiguous position over the past four years. Indeed, through a series of measures and reforms, the leaders of the institution had restricted cryptocurrency exchanges on stock exchanges centralized to professional investors.
To fulfill the eligibility criteria, an investor had to have a portfolio worth at least $1 million. According to several estimates, this would represent approximately 7% of the city’s population.
However, Hong Kong leaders have visibly begun to reconsider their current stance. Several media reports that the city government wishes to present a new bill supposed to regulate cryptocurrency once and for all.
According to Elizabeth Wong, the head of the fintech unit at the Securities and Futures Commission, this law will be completely independent and without taking into account the opinion of the Chinese government. This adds:
We believe that now is the right time to decide in more detail whether we will continue with this professional investor-only condition in the future.
During a conference hosted by InvestHK, Wong said that over the past four years, the cryptocurrency industry becomes more mature and flexible. She, therefore, believes that it is time for the government to change its position in the crypto sector.
Implementation of several projects to facilitate the use and exchange of crypto-currencies
The head of the SFC took advantage of the conference to point out that many legal initiatives are on course to develop the crypto ecosystem in the city of Hong Kong.
She particularly mentioned a new law introduced last January whose role is to allow service providers to sell certain derivatives related to cryptos. For many experts, this statement by the SFC is not a coincidence.
Indeed, on October 19, the Hong Kong government launched a fund of approximately $3.8 billion in order to attract foreign companies to the city. An initiative that comes a few years after the massive immigration of talents caused by strict lockdowns and a tense political climate.
However, several reports clearly show that Hong Kong remains a crypto-friendly city. It is among the top regions in terms of cryptocurrency adoption so far.
Within the city, one can find many elements such as cryptocurrency vending machines, pro-crypto regulations, and startup culture. Analyzing all of these factors, Forex Suggest ranked the city as the country best prepared for widespread cryptocurrency adoption in a study published in July 2022.
Hong Kong is a place of interest to many companies such as Yahoo which had set up notions of Metaverse for the confined.