Hong Kong announces new licensing regime for virtual assets
The Hong Kong Securities and Futures Commission has announced plans to allow retail investors to trade megacoin and digital assets on exchanges licenced by the Securities and Futures Commission provided that risk assessments are observed. This will be effective from June. Approval may prove to be difficult and this likely result in a a long waiting list of applicants.
Tan Yueheng, Chairman of BOCOM International and permanent honorary president of the Chinese Securities Association of Hong Kong, said that only a few companies will be successful in meeting the tough demands of new licensing risk management controls. Product knowledge and transparency of capital quality of applicants will also be monitored.
“As long as no one violates the bottom line, financial stability in China is not threatened,” said digital asset lawyer Nick Chan who is also a member of the National People’s Congress in China.
The backing from China’s crypto community is very important to Hong Kong. Lack of clarity in Hong Kong’s fin tech regulations has meant that China’s crypto businesses have switched to work with Singapore or Dubai. However the comeback of crypto trading in Hong Kong is imminent. Tron founder Justin Sun claims that he would be relocating to Hong Kong to be “closer to the action.” Crypto exchange Cryptocurrency trading exchange Huobi has also announced its plans to expand it operation in Hong Kong.
Web3 businesses
Hong Kong accelerator programme G-Rocket aims to attract 1000 Web3 businesses. So far 300 Web3 firms have signed up with around 75 percent participation from overseas entrepreneurs and 25 percent participation from mainland China.
“We are a window to China, and yet we have adopted laws, practices and economic principles that are adopted globally,” said Duncan Chiu, Hong Kong MP for the technology industry. “There will always be competition from other places like Singapore and Dubai,” he added. “It will only drive us to do more and most importantly how to regulate, license the industry and yet not over-regulate so that it hinders innovation.”
Background
China began its crackdown on cryptocurrencies in 2017 and banned trading in 2021. Some of the biggest names in the industry such as Binance and Tron relocated to other countries in Asia. China recently relaxed its policy on the development of blockchain technology and approved the development of some NFTs.
China is the world’s second largest economy. The sign of China’s possible support of Hong Kong’s strategy to become a fintech hub has been met very positively by the sector.
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