Hong Kong Aspires to Be a Crypto Asset Hub
Regulators stated the city’s ambitions to be a virtual asset hub at the start of Hong Kong FinTech Week. The government said it would hold consultations on letting ordinary investors invest on regulated platforms. Moreover, it added that it is open to contemplating virtual asset futures exchange-traded funds (ETFs).
The irony is that Hong Kong was already a hub only a few years ago. People who have been around the crypto scene for a while will recall Bitmex having an office, replete with a shark tank, directly above the Securities and Futures Commission, Hong Kong’s financial regulator.
The SFC then began knocking on doors. Moreover, exchanges began to fear being penalized for listing tokens without first seeking legal advice on whether they were securities within the jurisdiction. The expenses were expensive, with a legal opinion costing up to $10,000 per token.
The regulator issued leverage warnings. It established an opt-in method via which virtual asset service providers (VASP) might get licenses to trade securities and provide automated trading services. It was demanding. Only BC Group, which operates the exchange OSL, has received encouraging news; HashKey Group has received in-principle clearance.
One Nation, Two Systems
China has outlawed companies that provide cryptocurrency services. Hong Kong’s lawmakers claimed that the city still operates under the “one nation, two systems principle,” which states that the city is part of China yet can govern itself. Firms, though, were skeptical that Hong Kong could maintain its autonomy in selecting how to regulate cryptocurrency. They flocked to Singapore and other jurisdictions in droves.
According to BC Group executive director Gary Tiu, Hong Kong devised “a pretty thorough set” of laws for licensed crypto firms. The group’s digital platform division, OSL, took more than two years to get SFC licenses and begin dealing in securities and providing automated trading services. Cybercriminals hacked and stole $28M from Deribit, cryptocurrency options, and futures exchange.
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