The securities regulator in Hong Kong wants to relax current restrictions on cryptocurrency trading and permit small-scale investors to make direct investments in virtual assets.
Hong Kong has started a number of regulatory actions pertaining to the cryptocurrency sector in an effort to reclaim its position as a major global cryptocurrency hub.
Hong Kong, a Chinese metropolis and special administrative territory, is eager to set itself apart from mainland China with regard to its attitude to cryptocurrency legislation.
According to Elizabeth Wong, head of the fintech division at the Securities and Futures Commission, the Hong Kong government is considering introducing its own bill to regulate cryptocurrency in a way that is independent of China (SFC).
According to Wong, one of the SFC’s proposals is enabling retail investors to “directly invest into virtual assets,” the South China Morning Post reported on October 17.
Such a move would be a substantial departure from the SFC’s policy during the previous four years, which has limited professional investors to trading cryptocurrency on controlled exchanges, Wong pointed out. Individuals with portfolios worth at least $1 million, or around 7% of the city’s population, as of September 2021, are eligible investors.
Wong noted that over the past four years, the crypto business has gotten more compliant, and he suggested that it’s time to rethink the city’s position on crypto. He said:
“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.”
The SFC official also noted a few additional legislative actions aimed at fostering the growth of the cryptocurrency ecosystem in Hong Kong, such as a rule that was put in place in January to let service providers to market specific derivatives relating to cryptocurrencies. According to Wong, the regulator has also been considering whether to permit regular investors to invest in exchange-traded funds with a focus on cryptocurrencies.
The most recent information comes as Hong Kong, on October 19, announced the creation of a $3.8 billion fund to entice foreign companies back to the city following a significant exodus of talent brought on by severe lockdowns and a contentious political environment.
The Hong Kong Special Administrative Region’s government has announced that the local government has presented a bill to suggest creating a legal framework for companies that offer virtual asset services. The municipal officials also want to make Hong Kong a “international virtual assets center” by embracing new technologies like nonfungible tokens and the metaverse.
Some publications claim that Hong Kong has so far been successful in promoting the acceptance of cryptocurrencies. In a report by Forex Suggest released in July 2022, Hong Kong was voted the best-prepared country for mass crypto adoption taking into account a number of aspects including crypto ATM installations, pro-crypto policies, and startup culture.