Hong Kong is “back in business” and exploring whether to legalize crypto trading by retail investors, its finance chief announced yesterday, at the beginning of a week of conferences aimed at resuscitating the territory’s image.
In contrast to China where crypto has been all but banned, Hong Kong is looking to relax regulations and claw back some of the business that has left.
Years of strict COVID-19 pandemic controls and a political crackdown have hammered Hong Kong’s economy and sparked an exodus of talent that authorities say they now want to reverse.
Photo: Reuters
A fintech conference opened yesterday and is to be followed tomorrow by a finance summit attended by some of the world’s top bankers.
“Hong Kong is open and inclusive toward the global community of innovators engaging in virtual asset businesses,” Hong Kong Financial Secretary Paul Chan (陳茂波) told delegates at the fintech conference.
“In a great many ways, we are telling the world that we are back in business,” he said, in a speech that had to be delivered remotely after he caught COVID-19 last week during an overseas trip.
In a new policy statement the government said that it would launch a consultation to explore how the retail segment “may be given a suitable degree of access.”
It added that Hong Kong was willing to review “property rights for tokenized assets and the legality of smart contracts.”
Hong Kong restricts exchanges to clients with portfolios of at least HK$8 million (US$1 million).
Expanding permission to retail investors would allow far more regular residents to invest in cryptocurrencies and virtual assets, but that carries its own risks.
There has been a global push to regulate the crypto market and protect investors following wild swings and a string of high-profile collapses.
Critics say that crypto is an ideal tool to generate investment bubbles, hide illicit wealth and enable scams. China, once one of the world’s largest crypto markets, last year banned transactions of digital currencies.
Singapore recently reinforced regulations around retail transactions after a number of crypto exchanges imploded, including in the city-state, while Japan has recently relaxed some of its more conservative rules on listing tokens. Given its position as a gateway for China to international markets, Hong Kong was initially something of a crypto hub.
The territory then introduced a voluntary licensing regime in 2018 for big exchanges, but only two were approved for permits: BC Technology Group Co (品牌中國集團) and HashKey Group.
One of the biggest exchanges that used to be in Hong Kong, FTX Trading, moved to the Bahamas last year.
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