Hong Kong is set to become a hub for digital assets, but companies should expect strict regulations, according to authorities. The Hong Kong Monetary Authority (HKMA) has made it clear that crypto firms enticed by the city’s attempt to establish itself as a hotspot for digital-asset business will not operate under lax regulations. Eddie Yue, the Chief Executive of HKMA, said in an interview that the regulation will be tight, adding, “We will let them create the ecosystem here and that actually brings a lot of excitement. But that doesn’t mean light-touch regulation.” On June 1, Hong Kong will launch a new licensing regime for virtual-asset service providers, allowing retail investors to acquire and trade major cryptocurrencies like bitcoin and ether.
The move is part of efforts by Hong Kong authorities to restore the city’s credentials as a leading financial center in the aftermath of restrictions imposed in response to the Covid pandemic and political unrest in the territory. While there has been no change in China’s official policy regarding crypto-related activities, which remain heavily restricted in the mainland, there have been indications that Hong Kong’s push to become a major hub for digital assets has the backing of Beijing. A report in late March revealed that state-owned Chinese banks are ready to serve crypto companies in the city.
Regulations for the industry have been tightening around the world following last year’s market crash and the collapse of major players such as FTX, a leading cryptocurrency exchange. While the U.S. has been cracking down on businesses with enforcement actions and lawsuits, Hong Kong seems to be moving in the opposite direction. The city’s crypto guardrails were very tight in the last few years, Yue commented. They have now been lowered to a “reasonable and sustainable level,” but they won’t allow the recurrence of any FTX-type event in the city, he emphasized.
Hong Kong’s legislative framework introducing the new crypto rules will bring transparency and clarity, Yue insisted in the interview. Companies should expect strict regulations when operating in the city’s crypto industry. The new licensing regime for virtual-asset service providers will be launched on June 1, allowing retail investors to acquire and trade major cryptocurrencies like bitcoin and ether.
The move is part of Hong Kong authorities’ efforts to restore the city’s credentials as a leading financial center in the aftermath of restrictions imposed in response to the Covid pandemic and political unrest in the territory. While there has been no change in China’s official policy regarding crypto-related activities, there have been indications that Hong Kong’s push to become a major hub for digital assets has the backing of Beijing. A report in late March revealed that state-owned Chinese banks are ready to serve crypto companies in the city.
The US has been cracking down on businesses with enforcement actions and lawsuits, but Hong Kong seems to be moving in the opposite direction. The city’s crypto guardrails were very tight in the last few years, but they have now been lowered to a “reasonable and sustainable level,” according to Yue. The new regulations will bring transparency and clarity to the industry.
In conclusion, Hong Kong’s new regulations will be favorable enough to attract a significant number of crypto companies to the region. Companies should expect strict regulations when operating in the city’s crypto industry. The new licensing regime for virtual-asset service providers will be launched on June 1, allowing retail investors to acquire and trade major cryptocurrencies like bitcoin and ether. The move is part of Hong Kong authorities’ efforts to restore the city’s credentials as a leading financial center in the aftermath of restrictions imposed in response to the Covid pandemic and political unrest in the territory.
