The Hong Kong government has launched several legal initiatives related to the cryptocurrency industry as part of its effort to regain its status as a global cryptocurrency hub.
In contrast to mainland China's blanket crypto ban, Hong Kong is prepared to distinguish its crypto regulation approach from that of mainland China.
According to Elizabeth Wong, head of the fintech unit at the Securities and Futures Commission (SFC), the government of Hong Kong considers introducing a bill to regulate crypto in a China-free manner.
Wong said that one of the SFC's initiatives is to allow retail investors to "directly invest into virtual assets," the South China Morning Post reported on Oct. 17.
An initiative of this nature would represent a significant change from the SFC's previous position, which restricted crypto trading on centralized exchanges to professional investors. As of September 2021, individuals with a portfolio worth at least $1 million, or about 7% of the city's population, are eligible to invest.
Since the crypto industry has become more compliant over the past four years, Wong believes that it is time for the city to change its stance on crypto, stating:
“We think that this may be actually a good time to really think carefully about whether we will continue with this professional investor-only requirement.”
Other legal initiatives targeting the development of the crypto ecosystem in Hong Kong were also mentioned by the SFC official, including a policy introduced in January allowing service providers to sell certain derivatives related to crypto. Wong noted that the regulator is also reviewing whether to allow retail investors to invest in crypto-related exchange-traded funds.
On Oct. 19, Hong Kong launched a $3.8 billion fund to attract foreign businesses back to the city following a massive exodus of talent due to strict lockdowns and tense political conditions.
It has been announced that the government of the Hong Kong special administrative region has introduced a bill to establish a regulatory regime for virtual asset service providers. Furthermore, the city authorities intend to embrace emerging technologies such as nonfungible tokens and metaverse, in order to establish Hong Kong as an international center for virtual assets. Some reports indicate that Hong Kong has already achieved success in terms of crypto adoption. Hong Kong was ranked as the best-prepared country for widespread crypto adoption in a study by Forex Suggest published in July 2022 based on factors such as crypto ATM installations, pro-crypto regulations, and startup culture.