By Michael Scott
The commitment by Hong Kong towards becoming a critical crypto hub is gearing closer as it launches crypto licensing in May 2023. The licensing regime targets to bring regulatory clarity in the administrative region with access to the retail traders scheduled for June 1.
The highly anticipated licensing regime is slated to facilitate Hong Kong in becoming a global crypto hub. The Securities and Futures Commission (SFC) chief executive Julia Leung reiterated that the administrative region targets to introduce guidelines for the crypto exchanges seeking to establish operations in May.
Public Consultations Integrated in When Formulating Crypto Licensing Regime
In her Thursday, April 27 speech, Leung indicated that the regulatory framework set for May is incorporating 150 responses collected in the public consultation process. The executive indicated that public consultations were sought by SFC from 2022.
Leung clarified that public consultations aimed to formulate the best mechanism that retail investors would access cryptos. She added that consultation allowed SFC to assess the viability of introducing the crypto exchange-traded funds (ETFs) in the administrative territory.
Leung considers that the newly formulated rules will facilitate retail investors in trading the lead cryptos, including Ethereum and Bitcoin, by June 1.
Hong Kong Set to Attract Multiple Crypto Companies
The SFC executive restated that while Hong Kong is permitting crypto exchanges to launch operations in the administrative region, they should prioritize compliance. In particular, Leung observes that holders of portfolios approximated at $1 million – translating to HK $8 million must comply with the restrictions imposed by the existing legislation.
Leung reveals that SFC is continually running pilot projects aimed at exploring the benefits that digital assets yield. Also, they assess their suitability for integration within the financial markets. The executive indicated that the pilot phase is assessing the green bonds tokenization and viability of central bank digital currency (CBDC) in Hong Kong.
While the crypto community is lauding efforts undertaken by Hong Kong, they are concerned about the impact it would have on its relationship with mainland China. The community is reluctant, given that mainland China banned bitcoin mining and crypto trading in a 2017 pronouncement.
Efforts to Restore Hong Kong as a Crypto Hub
BitMEX former executive Arthur Hayes indicated that accessing Chinese customers would readily make Hong Kong a desired destination for crypto companies. The convicted founder of Bitmex for violating antimony laundering laws by the US Department of Justice (DOJ) lauded efforts to rekindle Hong Kong’s crypto hub credentials.
Hayes admits that Hong Kong’s emergence as a critical crypto hub tumbled following the zero-Covid policies. The Singapore resident forecasts that current efforts by the Hong Kong SFC signal progress in restoring the crypto hub.
Hayes indicated that the Hong Kong economy is primarily propelled by ordinary wealthy Chinese. He added that the authorities are confident that the SFC efforts will yield positive outcomes.
The Secretary for Financial Services and Treasury, Christopher Hui, echoes Hayes’ sentiment indicating that Hong Kong is set to become a prominent Web3 hub in Asia and globally. The Secretary indicated that Hong Kong attaches essence to virtual assets and Web3.
As such, Hui illustrated that the number of companies that expressed interest in establishing a business in Hong Kong exceeded 80. He indicated that the applicants comprised exchanges, security, wallets, a blockchain infrastructure and payment providers.
A report published in March by Nikkei Asia indicated that Chinese crypto firms, including banks, would allow their clients to engage in Bitcoin and Ethereum. However, the report indicated that the banks and securities firms would only accommodate transactions on licensed exchanges.
Bitget Set for a New Platform for Hong Kong Users
Meanwhile, the crypto exchange Bitget notified its users that it would terminate the bitget.com platform by June 1. Instead, it is launching a new platform BitgetX.hk. As such, BitgetX Hong Kong indicated applying to operate under the virtual asset service provider (VASP) license.
The statement published on April 24 indicates that Hong Kong users would not access Bitget.com starting May 15. It indicated that the new platform would prioritize compliance, thereby demanding new users to complete the known-your-customer (KYC) at BitgetX.hk.