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The Hong Kong government Crypto Policy Statement revealed on Oct. 31 its plans to develop a “vibrating sector and ecosystem” for the fledgling industry.
The policy statement marks an important shift for the government, which recently announced its intention to allow retail traders to invest directly in cryptocurrencies.
Authorities have set up a regulatory agency to license cryptocurrency exchanges using an opt-in approach. The statement continued that the government is also providing guidance to banks and other financial institutions offering crypto-related products.
Per the policy statement, licensed exchanges will operate in compliance with required anti-money laundering, counter-terrorism financing (AML/CTF) and investor protection laws. This will allow us to access a wider investor network in the Hong Kong market.
Hong Kong’s Securities and Futures Commission (SFC) will conduct a public consultation to determine the level of cryptocurrency exposure allowed for retail investors. At the same time, the government has hinted that it would welcome crypto-related exchange-traded funds (ETFs) under its jurisdiction.
The Hong Kong government has said that stablecoins increase the potential for significant interconnections with traditional financial markets, such as payment systems.
As a result, the Hong Kong Monetary Authority is seeking feedback on a discussion paper aimed at regulating payment-related stablecoin activity. More information will be provided soon, according to the policy statement.
Meanwhile, the Hong Kong government has acknowledged that current private property laws may not apply to virtual assets as they have unique characteristics that differ from traditional investments.
However, governments are willing to consider legal provisions to strengthen the adoption of tokenized assets and determine the legality of smart contracts.
The government is also considering various pilot projects to maximize the technical advantages of virtual assets.
The government is working on projects such as the 2022 Hong Kong Fintech Week (HKFTW) NFT issuance, green bond tokenization and Central Bank Digital Currency (CBDC) e-HKD, according to the statement.
The government said it would be happy to adopt the underlying technology for virtual assets and promote profits within its jurisdiction. It continued to welcome the clustering of fintech and VA communities and talent in Hong Kong.
The Hong Kong government’s policy statement elicited a positive response from the crypto community and was hailed as a welcome development.
1) A very promising update from Hong Kong on cryptocurrencies: https://t.co/rXLpORfUvT
If only I had come last year…
SBF (@SBF_FTX) October 31, 2022
FTX founder Sam Bankman-Fried deeply appreciates “when policymakers engage constructively and optimistically with those most important to the direction of the industry.” He added that he wanted the plan to come to fruition last year.
Zheng Zhigang, CEO of Shinsegae, said: Said Hong Kong could become the only place in China where virtual asset services are legal due to its one country, two system advantage.
