Hong Kong is considering opening the opportunity for retail investors to trade crypto assets. The latest development is a continuation of efforts by Hong Kong authorities to make the region a hub for digital assets.
According to a February 20 press release, Hong Kong’s Securities and Futures Commission (SFC) has released a consultation paper proposing new measures that could allow licensed crypto asset providers to offer services to retail investors.
The Commission did not reveal which digital assets it would allow retail investors to own. Still, it noted that assets should be included in no less than two acceptable, investible indexes from independent providers. The consultation period will end on March 31.
The aim is to allow retail crypto trading under Hong Kong’s new licensing regime for digital asset providers, due on June 1, 2023. The region has a population of around 7.4 million residents, many of whom would now have the opportunity to trade crypto on regulated venues.
Licensing Regime for Crypto Exchanges
Under the licensing requirement, crypto exchanges conducting business in Hong Kong or “actively marketing” to Hong Kong investors must obtain a license from the SFC.
SFC stated that new and pre-existing exchanges who plan to apply for a license should start reviewing and revising their systems and controls to prepare for the new arrangements. It added that those who do intend to apply for a license would be ordered to wind down their business in the special administrative region.
“As has been our philosophy since 2018, our proposed requirements for virtual asset trading platforms include robust measures to protect investors, following the ‘same business, same risks, same rules’ principle,” Ms. Julia Leung, the SFC’s Chief Executive Officer, said.
Hong Kong embraces crypto
The latest development is part of Hong Kong’s ambition to become a regional hub for crypto despite Mainland China’s blanket ban on the asset class.
Last week, the government of Hong Kong sold HK$800 million (Approx. $102 million) worth of tokenized green bonds with a coupon rate of 4.05%. The move, under the Government’s Green Bond Program, makes Hong Kong the first to use a blockchain to issue a tokenized green bond.
