By Mark Ackman
Hong Kong appears to be taking measures to legalize crypto retail trading, which would be the opposite of the crackdown on any such activities by Beijing in mainland China.
On Monday, the financial authorities in Hong Kong announced that the regulators in the Chinese territory are also exploring the possibility of listing crypto exchange-traded funds (ETFs).
This is just another step in the intense rivalry of the city with Singapore for becoming the financial hub of the region.
ETF authorization
Executive director and the deputy chief executive of the Securities and Futures Commission (SFC), Julia Leung said that the regulatory body was thinking of setting up a regime for authorizing ETFs that can offer exposure to mainstream digital assets.
However, she added that they would ensure that proper investor protection guidelines are in place. Leung spoke at the FinTech Week of the government.
It is one of the first prominent financial events to be conducted after hotel quarantine measures were scrapped in Hong Kong last month.
She said that for now, they were only going to offer bitcoin and ether futures that would be traded on the Chicago Mercantile Exchange.
The plans
The Hong Kong government announced that a public consultation would be conducted by the SFC to determine how a suitable degree of access can be granted to retail investors to digital assets in the new licensing regime.
Under the current rules in Hong Kong, crypto trading is only available to institutional investors who have to have a portfolio of at least HK$8 million.
This move from Hong Kong comes after Singapore may tighten its regulations applicable to retail crypto trading and the authorities of the city-state are expected to introduce new restrictions.
As far as Beijing is concerned, it had declared all crypto-related activities illegal in the previous year.
Digital assets
Paul Chan, the financial chief of Hong Kong, spoke via video at FinTech Week after getting infected with the coronavirus.
He said that where digital assets are concerned, Hong Kong is inclusive and open. This comes after the COVID curbs imposed in Hong Kong had seen several residents leave and undermine its status as a financial hub.
On Monday, the economy in Hong Kong saw its worst decline in the last two years, as there was a 4.5% fall in its gross domestic product in the third quarter.
A decline of 0.8% had been predicted by economists, which was lower than the drop of 1.3% in the first quarter and 3.9% in the second quarter.
Chan stated that they wanted to make their stance on digital assets clear to global markets in order to showcase their dedication to achieving financial innovation.
Hong Kong’s legislature currently has a bill in the works, which is aimed at setting up a licensing regime for digital asset providers and it is expected to be implemented next year in March.
The former CEO of Hong Kong Exchanges and Clearing, Charles Li stated that this would help in moving the needle and get a conversation going about digital assets.