Hong Kong opens doors to Bitcoin businesses, warns of ‘tight’ regulations
- The Hong Kong Monetary Authority’s Eddie Yue confirmed that Bitcoin startups will be allowed in Hong Kong.
- The SEC will soon release a detailed list of how involved retail traders should be.
Hong Kong will open its doors to Bitcoin [BTC] companies in less than a month. However, financial watchdogs have warned them not to expect a smooth ride.
The Hong Kong Monetary Authority’s Eddie Yue announced on May 9 that restrictions “will be tight.” Talking on Bloomberg Wealth Asia Summit this week, he said that while Bitcoin startups are welcome, they shouldn’t expect things to be easy.
Hong Kong introduces new rules
On June 1, Hong Kong will start a new licensing system for companies offering virtual asset services. It also intends to enable ordinary investors to trade significant crypto assets. However, mainland Chinese traders will not have access to this option due to Beijing’s ban on cryptocurrency.
Yue went on to say that banks will soon receive more instructions on how to handle crypto clients. According to him, the Securities and Futures Commission (SFC) will shortly publish the conclusions of its deliberations on the scope of involvement from private investors.
Permissions will be granted to platforms that deal in digital assets under the new regulatory system. During the following year, a stablecoin license requirement is expected to be implemented.
In the previous years, there have been very strict crypto railings in Hong Kong. However, they have now been reduced to a “reasonable and sustainable level”, according to Yue. However, they will not allow any FTX-style events to happen again in the city.
Regulations in the past
In February, the region’s securities regulator put forward a proposal for a licensing framework for Virtual Asset Service Providers (VASPs) that would allow retail traders access to authorized crypto platforms.
It was mentioned that limiting access would drive traders to unregulated foreign platforms. These platforms can currently only accommodate accredited professional investors.
Securities and Futures Commission (SFC) chief executive Julia Leung Fung-yee said the governments of China and Hong Kong are both aware of the prospects in the area and are acting to encourage incoming talent.
There will be extensive testing of tokens that can be listed for trading in Hong Kong. Along with supply, demand and liquidity checks, background checks of issuers and developers will be required.
Market-making will not be allowed and cryptocurrency exchanges must be fully insured to cover any risks or potential losses. While everything is happening across the Pacific, the situation for Bitcoin companies in the US is getting worse.
