Hong Kong differentiates between Bitcoin, DOGE vs LTC, DOT: Here’s how to see
Over the past couple of days, Hong Kong has been making headlines for its crypto-friendly moves. The special administrative region has embraced cryptocurrencies by allowing retail investments. Hong Kong Securities and Futures Commission [SFC] released a statement earlier this week noting the opportunity for retail investors trading large-caps like Bitcoin and Ethereum.
Retail investors will be able to trade popular digital assets on exchanges that have been granted an agency license. However, these virtual asset trading firms must consider Hong Kong’s investor protection. Chinese journalist Wu Blockchain tweeted,
In accordance with the Hong Kong SFC’s plan, only large-cap virtual assets that are part of at least two recognized indices will be eligible for trading. Not all of these assets will be entertained by the SFC. Bitcoin Cash, Stellar Lumens, Ethereum Classic, Litecoin, Polkadot and EOS, for example, have quite low liquidity.
In addition, the market depth of these assets was also poorly rated. Market depth is a market’s ability to withstand significant market orders without significantly affecting the asset’s price. All of these factors have led many to believe that the Hong Kong watchdog may not include these “speculative symbols.”
What assets can enter the cryptocurrency market in Hong Kong?
The Hong Kong market can support assets such as Dogecoin, Bitcoin, Ethereum, XRP and others. This is because they guarantee great liquidity. But Dogecoin, XRP, MATIC and LINK are not part of the two indices, which is a big requirement.
Unlike Bitcoin, Dogecoin is not part of the required number of indexes. Nevertheless, the chances of the meme coin are still high. Elaborating on the same, Kaiko stated,
“… some of the tokens that may be considered under the SFC’s new rules are not of the highest caliber, both from a fundamental and a liquidity perspective. This is actually a problem with index construction in crypto, but the SFC needs to properly account for liquidity, as they may exclude some tokens with better fundamentals and liquidity simply because they are not included in two indices.”
