In Hong Kong, retail investors may soon be able to trade digital tokens such as Bitcoin and Ether, a significant move toward becoming a crypto hub that diverges from the US crackdown. The Securities and Futures Commission has stated that individual investors would be allowed to trade large-cap coins on exchanges licensed by the regulator.
However, to ensure safeguards are in place, the regulator has proposed knowledge tests, risk profiles, and reasonable exposure limits for retail investors. The SFC did not specify which tokens would be allowed, but that they should be included in at least two acceptable and investible indexes. The consultation period will close on March 31, with the aim of allowing retail trading under the new licensing regime for crypto exchanges by June 1.
To recover Hong Kong's financial reputation, officials have aimed to create a mandatory regulatory framework that can attract firms and protect investors. The government has already permitted ETFs investing in CME Group Bitcoin and Ether futures and sold inaugural digital green bonds. Furthermore, digital asset executives are being drawn to Hong Kong, Dubai, and Europe, which have friendlier policy stances, as a series of crypto probes in the US clouds the country's position as an industry hub. Hong Kong's pivot could also open up a pathway to mainland Chinese investment, should Beijing loosen its ban on most crypto-related things on the mainland.
While Hong Kong's ambitions face many obstacles, including a decline in the virtual asset industry resulting in the loss of thousands of jobs and a lack of investment commitment from companies, the new licensing regime could usher in a new era for the city's crypto industry.
Crypto in HK
Recently, there have been several developments in cryptocurrency and blockchain technology in Hong Kong. The government launched its inaugural tokenized green bond worth 800 million Hong Kong dollars, and earlier last year, two BTC exchange-traded funds (ETFs) that track U.S.-listed crypto futures were introduced in the region. The ETFs are said to be managed by CSOP Asset Management.
Financial Secretary Paul Chan has voiced his belief that Hong Kong would be an excellent location for fintech and crypto startups. He has also reaffirmed the region's commitment to becoming a crypto hub. Thus, the latest initiative can be seen as a step toward achieving this goal.