Hong Kong Plays Catch-Up in Crypto

Hong Kong Plays Catch-Up in Crypto
25 October 2022

Just four years after banning retail investors from the crypto market, Hong Kong regulators are weighing opening up participation beyond institutional and professional investors, while preparing to establish a licensing system for virtual asset service providers, as it seeks to bring back fintech businesses to the city.

The Hong Kong Securities and Futures Commission, the city’s financial markets regulator, is considering allowing retail investors to “invest directly in virtual assets,” according to a report in the South China Morning Post.

Additionally, Hong Kong government officials said that the relevant bill to add cryptocurrency regulation content will be passed in the first quarter of 2023. According to the SCMP, the city government is distinguishing its approach from the crypto ban on the mainland, but has faced pushback over a lack of regulatory clarity.

Hong Kong is currently dealing with a talent exodus in the finance industry, which has been exacerbated by long-drawn lockdowns and strict movement rules in and out of the country amid the Covid-19 pandemic. Many who have left have relocated to jurisdictions such as Singapore and Dubai, which have either put in place or considering regulation for the digital assets industry.

Liang Hanjing, director of fintech for Invest Hong Kong, which has communicated with leaders in the virtual asset industry, told China Fund News that security tokens are a key area of focus for the Hong Kong government, and that it is “already actively promoting relevant preparations” in this space. The city is also looking to improve the relevant legislation for the regulation of virtual asset service providers.

Hanjing expects that the “Amendment Bill” is expected to be passed in the Legislative Council in the first quarter of 2023.

“More licenses will be issued at that time, and virtual asset trading will flourish,” the report said.

While Singapore remains cautious about crypto investing among the retail crowd, the city-state’s welcoming approach has helped the financial hub attract digital asset services-related firms from China, India and elsewhere in recent years, making it a major centre in Asia.

Fintech Week to welcome metaverse, web3

The Hong Kong government, which is organizing the city’s upcoming FinTech Week on Oct 31 to Nov 4, said the event will feature web3 and the metaverse prominently. It will also issue a policy statement on crypto to promote the development of the territory into an international virtual asset center.

Hong Kong’s crypto ambitions is part of China’s 14th five-year plan, which positions the city as the country’s international financial center and supports Hong Kong’s development into an international innovation and technology center. 

Related: Hong Kong Lures Web3, Metaverse Projects as City Reopens for Business

Blockhead Team
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