Hong Kong to explore legalizing retail crypto trading in reversal of previous proposal • TechCrunch

Hong Kong has proposed allowing retail investors to trade cryptocurrencies and crypto-exchange-traded funds and plans to conduct pilots in NFT issuance and CBDC as it looks to regain its status as a global financial hub.

The city had previously proposed restricting crypto trading to professional investors, a move that prompted many crypto entrepreneurs to relocate to Dubai and Singapore.

Hong Kong will review property rights for tokenized assets and explore the legalization of smart contracts “to provide a solid legal foundation for their development,” it said.

It also plans to put in place “appropriate regulations” for aspects such as “governance, stabilization and redemption mechanism” for the stablecoin.

The proposal comes at a time when China has stepped up its efforts to crack down on crypto transactions and Singapore is exploring a series of strict guidelines around virtual digital assets.

“We want to make our policy stance clear to the global market, to demonstrate our willingness to explore fintech with the global virtual resource community,” Hong Kong Finance Minister Paul Chan said. In the initial phase, Hong Kong expects the underlying assets to be “limited to bitcoin futures and ether futures on the Chicago Mercantile Exchange,” he added.

Hong Kong also describes the approach it wants to follow in a policy statement. It said the Securities and Futures Commission will conduct a public hearing on how retail investors can be given an “appropriate degree” of access to virtual assets under the new licensing regime.

“We recognize the VA [virtual asset] is here to stay, given how it has attracted attention from global investors and is increasingly seen as a conduit for financial innovations, not to mention the future opportunities that will be opened up as VA moves into the realms of Web 3.0 and Metaverse. The Financial Services and Treasury Bureau said in a statement.

“The Government, in cooperation with the financial regulators, is working to provide an enabling environment to promote the sustainable and responsible development of the VA sector in Hong Kong.”

Sam Bankman-Fried, CEO of crypto exchange FTX and a high-profile supporter of the industry, called Hong Kong’s move today “really promising” but added that if only the region had taken this stand last year, citing aggressive exodus like Hong Kong’s previous proposal caused.

“I really appreciate when policymakers engage constructively and optimistically with the people who matter most to an industry direction: the customers,” he said in a tweet.

In its statement on Monday, Hong Kong said it wants pilot projects to test the technological benefits of virtual assets and their applications in financial markets. These pilot projects include the issuance of NFTs, the tokenization of green bonds, and the “possible launch of the retail central bank digital currency, eHKD.”

Hong Kong, Singapore, and Dubai have attracted crypto entrepreneurs, investors, and tech workers from around the world over the past half decade with their friendly outlook on cryptocurrency. But in recent quarters, they have struggled with how open they want to remain.

Last week, Singapore proposed new guidelines that could soon require retail investors to take a test and not use credit card payments and other forms of loans for cryptocurrency trading.

The Monetary Authority of Singapore said in a set of consultation documents that it is concerned that many retail customers may “not have sufficient knowledge of the risks involved in trading” digital payment tokens, which could lead them to “take on higher risks than they would otherwise have done. been willing or able to bear.”