Hong Kong has moved ahead with plans to let retail investors’ take advantage of trading cryptocurrencies as it rivals with Singapore, to be a digital assets hub.
The Hong Kong Securities and Futures Commission launched a plan on Monday. It focuses on the industry’s two most significant crypto tokens i.e. Bitcoin and Ether, which are now open for retail customers. The requirement would be licensed exchanges to ensure clients have sufficient knowledge of virtual assets before they are allowed to trade.
Hong Kong is actively participating in all the operations related to digital assets trading platforms. The investors in Hong Kong will need to be licensed by the SFC.
The authority is working on six-week consultation proposals with the “interested parties,” while requiring a maximum of 2% client funds to be stored in ‘hot wallets’.
Hot Wallets: This is a term used to describe online accounts seen as vulnerable to hacks or phishing scams because their keys are sorted online.
Previously, trading in crypto was based on unlicensed exchanges, but as per the new plan, it grants retail trade on one condition: accessing licensed platforms. It would mark a credible image that helps in attracting crypto businesses to Hong Kong. Although a drawback has been aligned to the territory, which are the vying Singaporeans, who allowed retail trading at first. Later, it was stung by various high-profile crypto controversies, including last year’s dollar collapse- pegged token terraUSD.
Singapore-based crypto hedge fund Three Arrows collapsed in June last year, while an international manhunt for Do Kwon — co-founder of the company behind terraUSD — shone an international spotlight on the city-state.
“This sends a powerful message that Hong Kong wants to reclaim its status as a global crypto hub,” said Henri Arslanian, managing partner at crypto asset management firm Nine Blocks Capital Management.
“Many large crypto firms had difficulty operating out of Hong Kong in recent years, especially due to the Covid travel restrictions. This consultation will add to the renewed momentum that the city is seeing,” he added.
The crypto industry is seeking to rebound after a year defined by plummeting prices, thousands of job cuts, and a crisis of confidence that led to the collapse of several high-profile companies, including crypto exchange FTX, which was established in Hong Kong before moving to the Bahamas.
“In light of recent turmoil and the collapse of some leading crypto trading platforms around the world, there is a clear consensus among regulators globally for regulation in the virtual asset space to ensure investors are adequately protected and key risks are effectively managed,” said SFC chief executive Julia Leung.
- Published By Team Hongkong Journalist