In the Recent Wealth Asia Summit organized by Bloomberg, Hong Kong Monetary Authority (HKMA) chief executive Eddie Yue pointed out that Hong Kong is planning to have a strong regulatory approach and will avoid a light regulation policy. This was highlighted by the chief during the discussions on cryptocurrencies and other virtual assets.
He said “We will let them create the ecosystem here and that brings a lot of excitement. But that doesn’t mean light-touch regulation.” Yue also pointed out that cryptocurrencies, stablecoins and digital currencies are different, thus comprehensive regulation is required to establish a well-scrutinized ecosystem. During the interview, he further clarified that if any crypto asset financing facility is similar to traditional financing and the regulation will be similar. Hong Kong indicated that crypto companies drawn by the city to create a digital-asset hub should expect an exacting regulatory regime.
It is important to note here that Hong Kong kept a stringent eye on cryptocurrencies and other digital assets. Earlier, Cryptocurrencies were not regulated by Hong Kong’s other financial regulators. The
Hong Kong Monetary Authority (HKMA) has said that it does not regulate cryptocurrencies such as Bitcoin which it regards as a virtual “commodity” and not as legal tender or a means of payment or money.
Hong Kong’s banking laws and regulations, therefore do not apply to entities accepting or dealing in cryptocurrencies. Hong Kong’s regulators generally consider cryptocurrencies such as Bitcoin and Ether to be “virtual commodities” which are not regulated in Hong Kong. However, as noted in a September 2017 Statement on initial coin offerings, the SFC determines the regulatory status of cryptocurrencies on a case-by-case basis depending on whether they carry rights equivalent to traditional securities.
It is important to note here that Hong Kong prepares to launch a new licensing regime for virtual-asset service providers on June 1, which will also allow retail investors to trade major crypto assets. In April 2023, the chief executive of the Securities and Futures Commission (SFC) highlighted it is planning to publish guidelines on the licensing regime for virtual digital exchanges.
The guidelines as planned to be published in May aimed to provide support to crypto trading platforms that will be able to offer trading services to retail investors on June 1. She also mentioned that the consultation process for the regulatory framework for crypto exchanges in the country received more than 150 responses.
In the run to establish a crypto ecosystem Hong Kong can draft regulation laws from taking important pointers from laws from countries such as Singapore that have well-established regulations. The Singapore Government takes a pragmatic, cautious and tailored approach toward dealing with cryptocurrencies. While the Government recognizes the economic and social potential of cryptocurrency and seeks to foster a conducive regulatory environment for its adoption within Singapore’s financial landscape, at the same time, the Government is exercising caution by seeking to identify the risks involved.
