Bloomberg: Hong Kong's New Crypto Rules Pave Uncertain Path to Digital Asset Hub
Hong Kong's financial regulator finally implemented its new regulatory framework for crypto on the first of June.
Under the new rulebook, the city-state will allow retail investors in the city to trade specific “large-cap tokens” on licensed exchanges, given that safeguards such as knowledge tests, risk profiles, and reasonable exposure limits are put in place.
The Securities and Futures Commission (SFC) of Hong Kong will also start providing licenses to crypto exchanges.
The framework has been designed to prioritize investor protection over cost-saving for cryptocurrency exchanges as Hong Kong seeks to become a leading digital-asset hub, according to Bloomberg's Suvashree Ghosh.
Ghosh claimed this should not come as a surprise given that the crypto crash last year exposed risky practices and outright fraud.
She added that the Hong Kong government might hope that China may one day invest in cryptocurrency through Hong Kong.
"The potential lies not so much in the local Hong Kong market but vast Chinese wealth, some of which flows through the city," Ghosh said.
"And some investors even see the possibility of China one day lifting its mainland crypto ban and permitting citizens to do some trading through Hong Kong — both very, very big “ifs” that depend on the capricious whims of regulators."
However, the crypto industry has been cautious over the regulatory changes, citing concerns about the costs and complexities of adhering to such exacting rules.
The regulatory requirements include risk profiling, insurance and asset custody rules, and decisions on allowable tokens.
Despite this, several leading digital-asset platforms including big names such as Huobi, OKX, and Amber Group, have applied for licenses under the new crypto
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