Hong Kong Regulators Set to Launch Crypto Licensing Regulations in May
On April 27, the chief executive of Hong Kong security exchange Julia Leung revealed plans to release the crypto licensing regulations in May. The new regulation will support digital assets service providers in the region to provide crypto trading services to retail investors.
In the previous public consultation for the crypto licensing regulation, more than 150 participants expressed interest in the new regulatory framework. From the 2022 consultation, the regulators evaluate the most appropriate methods for Hong Kong to issue crypto assets to retail clients.
Scope of the New Crypto Licensing Regulations
The successful consultation supported regulators in formulating the legal procedure for providing exchange-traded funds (ETFs). As of June 1, retail investors will buy and sell leading crypto assets, including Bitcoin (BTC) and Ethereum (ETH).
The new regulation has also adopted a restrictive approach to prohibit investors from holding crypto portfolios worth $1 million. This restriction aims at safeguarding investors from exploitative businesses.
In addition, the regulators have engaged in multiple pilot trials to evaluate the benefits of specific crypto assets. The watchdog agency is conducting extensive research on the impact of digital assets on the financial markets.
The regulators plan to explore the country’s tokenized green bond’s performance and monitor the central bank digital currency (CBDC) progress.
The strategic action implemented in Hong Kong to create a friendly crypto environment has raised concerns over China’s crypto stance. Since 2017 Chinese regulators have opposed the adoption of cryptos.
The Chinese stance on digital assets has subjected the regulators to engage in embroiled dialogues. A recent announcement from BitMEX chief executive Arthur Hayes reveals that Chinese customers play a crucial role in attracting more crypto firms to Hong Kong.
In his report, Hayes argued that Chinese moguls have limitless control over the Hong Kong economy.
Examining the Suitability of the Hong Kong Market
Despite the ongoing market critics concerning the Hong Kong regulations, the regulators have confirmed to continue pursuing their goals for crypto. In March, the Secretary for Financial Services and the Treasury, Christopher Hui, announced that Hong Kong would become the next burgeoning centre for Asian Web3.
According to the Hong Kong registration records, Hui observed that more than 80 best-performing companies sought to expand to the region. He noted that most submissions included blockchain firms, security companies and payment providers.
Leung stated that most of the Virtual Asset Service Provider (VASP) applications received by the regulators were undergoing further review before approval. However, under the support of the Secretary for Financial Services (SFC) , some crypto firms have started operating in Hong Kong.
In March, Reuters announced that the SFC had already approved the operations of OSL and HashKey. In her previous report dated February 20, Leung emphasized the need to redefine Hong Kong’s Anti-Money Laundering (AML) policies along with the Know Your Customer (KYC) requirements.
In a separate report, the Nikkei Asia reporters announced that Chinese pro-crypto investors in securities and financial sectors pursued the Hong Kong market. The Nikkei team reported that the interested Chinese company sought licensing regulatory approval to provide major crypto assets such as Bitcoin (BTC) and Ethereum (ETH) to Hong Kong customers.
The suitability of the Hong Kong market has prompted Bitget to redirect its resources to develop a crypto trading platform for the users in the region. A few days ago, the Bitget team planned to comply with the Virtual Asset Service Provider (VASP) condition before broadening its market presence to Hong Kong.
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