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Hong Kong intensifies its efforts to establish itself as a crypto hub

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While digital-asset firms and authorities dispute elsewhere in Asia, Hong Kong is about to declare that individual investors can trade cryptocurrency under its new rulebook for the sector, pushing up efforts to build a center.

In a previous article, we reported that Hong Kong’s Securities and Futures Commission (SFC) CEO, Julia Leung, stated that the final guidelines for crypto exchanges planning to operate in Hong Kong will be released in May.

Now, at a conference on Tuesday, the city’s Securities and Futures Commission is expected to go into more detail about the findings of a consultation on retail participation. The organization is anticipated to remain with its intention to start allowing private investors to trade larger tokens like Bitcoin and Ether next month with the necessary safeguards.

In an effort to regain its position as a cutting-edge financial hub, Hong Kong will introduce a licensing scheme for virtual-asset platforms on June 1. However, following a market crash in 2022 that led to a wave of bankruptcies around the world, including the collapse of the FTX exchange, any embracing of cryptocurrencies is contentious.

The conclusion of the survey, according to Lennix Lai, the chief commercial officer at the cryptocurrency exchange OKX, would likely reflect

the view from the digital-asset community that safe, secure, and compliant retail trading is a key aspect of a robust virtual asset ecosystem.

Philippines and Malaysia

Regulators and the sector in Malaysia and the Philippines have recently come into conflict. Huobi Global was warned by Malaysia for conducting business “illegally” and told to cease operations there. According to a Huobi representative, the exchange hasn’t run in the nation since 2022.

The Philippines, however, claimed that a non-US derivatives trading platform recently launched by Gemini Trust Co. does not have the required licenses for the country. Prior until now, a Gemini spokeswoman declined to comment.

Hong Kong proposed allowing individual investors to trade bigger coins on exchanges that had SFC licenses in its consultation document in February. The regulator wants to make sure that safeguards including knowledge exams, risk profiles, and acceptable exposure limits are in place.

According to the report, the coins must be included in at least two reliable, investable indexes from independent sources, one of which must have expertise in the conventional financial industry.

Global Problem

Previously, we have reported that crypto businesses under attack in the U.S. are seeking greener pastures abroad in Europe and Asia.

Regulators throughout the world are debating how to handle the cryptocurrency business. Countries like Dubai and Hong Kong are attempting to draw capital for investments in cryptocurrencies. Singapore intends to limit involvement by retail investors. After a slew of controversies, South Korea may enact its first separate cryptocurrency law this week. The sector has come under pressure from the US.

Given that the industry has cut back and has only partially recovered from a $1.5 trillion crash last year, there are still questions about Hong Kong’s crypto pivot. Companies including Huobi Global, OKX, and Amber Group have declared their intention to submit applications for licenses under the new system.

Hong Kong looks very promising on the world map as a crypto hub. We have also reported that the Securities and Futures Commission of Hong Kong requested public input on proposals to permit authorized cryptocurrency exchanges to provide services to retail investors.

The SFC has been running a number of pilot projects to evaluate the possibilities of digital assets and their potential use in financial markets. These projects include testing the feasibility of tokenizing green bonds and creating Hong Kong’s own central bank digital currency (CBDC).

Companies should anticipate a strict regulatory environment, according to Eddie Yue, Chief Executive Officer of the Hong Kong Monetary Authority.

In an interview at the Bloomberg Wealth Asia Summit earlier this month, Yue said,

We will let them construct the environment here and it actually gives a lot of excitement. But that does not imply gentle regulation.

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