Hong Kong Targets Tokenization With New Law Standards
In a recent report, the Hong Kong government is reportedly set to adopt cryptocurrency tokenization with a new set of regulation criteria. In another news, the Hong Kong Financial Secretary stated that the recent JPEX scandal would not deter the country’s plan to encourage the growth and development of the cryptocurrency industry in the region.
According to the report, the Financial Secretary of Hong Kong, Christopher Hui, stated during the recently concluded Fintech Week that the authority plans to issue new regulations to protect customers of crypto tokenization. In addition, the report noted that the Chinese city aimed to create more policy documents on crypto trading, stablecoins, and tokenized assets as it pursues its targets of becoming a crypto and web3 hub in the Asian continent.
During his speech, Hui revealed that the city’s Securities and Futures Commission (SFC) planned to release memos on intermediates dealing in activities related to tokenized securities and the tokenization of investment products authorized by the SFC.
Government Plans To Issue Green Bond
Furthermore, the Financial Secretary revealed another aspect that the Hong Kong authorities target, which includes developing and expanding their remit to enable the selling and buying of digital assets outside the activities on trading platforms.
Meanwhile, the report stated that the Financial Services and Treasury Bureau and the Hong Kong Monetary Authority (HKMA) plan to jointly execute a new consultation on the regulatory framework for issuers of stablecoins. During the program, the CEO of HKMA, Eddie Yue, stated that utility cases like tokenized bonds have found their applications in real-time trades and transactions, exceeding the proof of concept phase.
In addition, he claimed that earlier this year, the regulatory agency, in conjunction with the authorities, was developing a tokenized government green bond, which would be the first of its kind. Yue added that the proposed green bond aims to display the interoperability and compatibility of the legal and regulatory protocols of Hong Kong with the new issuance protocol. He asserted that the industry and the government are currently deliberating on how to open up more opportunities for the following tokenized product.
Hong Kong To Publish Two Tokenization Circulars
In the report, Eddie Yue said that in order to facilitate the adoption processes of tokenization, there would be a significant increase in differences in tokenization. Additionally, he anticipated the rise in payment methods based on blockchain systems, including assets offered by banks such as tokenized deposits and stablecoin wallet.
The CEO of the Securities and Futures Commission, Julian Leung, claimed that the Hong Kong regulator would publish two tokenization circulars. The first circular would address the risks involved in the new technology, as well as the expectations of the authorities from intermediates while they use the new technology to perform transfer, observe due diligence, or plan to issue private tokens, according to Leung.
Furthermore, the CEO stated that the second circular, which is pending, aims to address the prerequisites the commission set for any organization to fulfill before issuing legal funds. He added that the agency would issue more regulations regarding their expectations of the new technology.
Hong Kong Maintains Vision For Crypto After JPEX
The SFC executive pointed out that the agency plan to ensure the assets are safely transferred, and the ownership records are intact as the technology is still new. Leung contended that the agency supports the industry, experiments, and plans to make many more use cases. However, he highlighted many new financial risks linked with the new technology, especially in fund transfer, keeping ownership and records of these tokens.
During his speech, Christopher Hui addressed the recent crypto exchange JPEX scandal that involved the loss of about $165 million, stating that the government is not discouraged in its plan to develop Hong Kong into a global Web3 hub in the region. He pointed out that many questions had been asked if the scandal scenario would affect the government plan for web3.
In reference, the CEO was referring to the financial scandal which happened on JPEX, an exchange based in Dubai, leaving about 2,500 citizens of Hong Kong robbed and defrauded of their assets. Consequently, the incident reportedly spurred the SFC to file a lawsuit against JPEX claiming it operates illegal local services. In addition, the regulatory commission stated that it would tighten its crypto rules and regulations to fish out bad actors and punish them.
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