Hong Kong’s plan to ban retail crypto traders could force them to patronize unregulated platforms
- Crypto industry ban mounts in Hong Kong.
- Global Digital Finance fights against the ban.
- Government ends consultation with industry players.
Reason for restriction of crypto retail traders.
Significant stakeholders in the crypto sphere in Hong Kong are trying to resist a proposed law that would place a ban on cryptocurrency trading to professional investors.
The law will restrict of the local population of the retail crypto traders from the crypto sphere.
This is coming when financial regulatory bodies around the globe are looking for a way to regulate the market as governmental policies cannot influence it.
On Feb.15, in a comment published to the South China Morning Post.
Global Digital Finance position on the proposed bill.
Global Digital Finance reiterates that pushing such laws would leave retail crypto traders no choice but to embrace unregulated trading platforms, which will make the government lose in the long run, as tax could be gotten from regulated platforms.
This might open the floodgate for a lot of fraudulent activities to be perpetrated (sentence 7a too long!use 12 words or less per sentence).
Global Digital Finance represents cryptocurrency exchanges such as BitMEX, Huobi, Coinbase, and OKCoin, and has been at the forefront of industry efforts to push back against the forthcoming legislation.
The bid by the regulatory body in charge of financial activities, Hong Kong Financial service and Treasury Bureau, to crack down on money laundering and counter-terrorist financing, led to the proposal in Nov.2020.
The move aligns with efforts to bring domestic regulations into line with recommendations from the Financial Action Task Force, FATF. How this bill can be tackled using a digital currency is left to be seen.
The proposed bill might lead to stifling the trading of cryptocurrency in China mainland, although the proposal surpasses the grade of the FATF’s framework.
Malcolm Wright clearly stated that FATF members such as the United Kingdom and Singapore ensure retail traders partake in the cryptocurrency market.
The government consulted with retail and industry bodies in charge of cryptocurrency in January. The implementation of deliberation during the consultation is expected to kick start in earnest.
South China Morning Post’s estimate that 93% of the domestic population would be affected by the ban is based on a recent CitiBank survey that found that roughly 7% — 504,000 individuals — had enough assets to meet the threshold for professional investors.
What the government should know on restricting crypto retail traders.
Restricting crypto retail traders is not the best solution. Having a regulatory body that monitors the industry is better than an outright ban, which is counterproductive as retail traders will find a way of trading abroad.
A lot of job loss could also occur as a regulated platform could be forced to reduce staff and spike the country’s crime rate.
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