Cryptocurrency trading holds significant weight within the virtual asset ecosystem, as recently highlighted by Julia Leung Fung-yee, CEO of the Securities and Futures Commission (SFC) of Hong Kong. In a recent speech, Leung emphasized Hong Kong’s embrace of Web3 regulation, following the collapse of the crypto exchange FTX last November. By incorporating virtual asset providers into the regulatory system, Leung believes that not only can innovation be embraced, but market trust can also be strengthened.
Post FTX’s bankruptcy, Hong Kong has undertaken a number of measures to reduce regulatory risks associated with centralized exchanges. In December last year, the legislative council brought virtual asset service providers under the same legislation governing traditional financial institutions. As a result, the city’s financial regulator subsequently implemented a new regulatory framework for crypto on the first of June.
The new set of rules enforce strict Anti-Money Laundering guidelines and investor protection laws for digital asset exchanges operating in Hong Kong. Moreover, retail investors are now permitted to trade virtual assets, as opposed to solely professional investors and traders with at least $1 million in bankable assets.
This change in regulatory approach seems to indicate Hong Kong’s commitment to fostering a crypto-friendly environment. Earlier this month, the (HKMA) inquired banks, including HSBC, Standard Chartered, and Bank of China, about their reluctance to accept crypto exchanges as clients. They emphasized that due diligence for such potential customers should not present an “undue burden,” particularly for new businesses wanting to capitalize on Hong Kong’s opportunities.
Hong Kong’s strive to become an industry hub has been further evidenced by the government’s allocation of 50 million yuan ($7 million) to expedite the development of Web3 earlier this year. These efforts seem promising, as more crypto companies continue to move to the city-state to experience this amicable regulatory climate. Just recently, the Financial Secretary, Paul Chan Mo-po, revealed that over 150 Web3 firms had established operations in Cyberport within the past year. Managed by a wholly-owned subsidiary of the Hong Kong Special Administrative Region government, Cyberport currently hosts a total of 1,900 enterprises.
In conclusion, Hong Kong’s proactive steps in incorporating virtual asset providers and adapting its regulatory framework signify the city’s ambition to rebuild its position as a hub within the cryptocurrency realm. However, it remains crucial to observe how this balance between fostering innovation and ensuring investor protection plays out in the long term.
Source: Cryptonews
