Crypto exchanges that are currently operating in Hong Kong will need a license from the market regulator of the city. It will only then be allowed to offer services to professional investors, as per the proposal of the government.
Governments and financial regulators in the world are still assessing how they will regulate the crypto industry. Investor protection and prevention of money laundering are special concerns here.
Cryptos, such as bitcoin and ether, have been rolling out on a roller coaster’s ride quite interestingly this week. And this has raised many questions about their potential as a mainstream investment.
Dozens of crypto exchanges are operating in Hong Kong. It includes some of the largest exchanges in the world. The city presently has an “opt-in” approach under which the exchanges can apply for licensing by the Securities and Futures Commission of the markets watchdog; however, they do not have to.
Hong Kong’s Financial Services and the Treasury Bureau is consulting with the market on alterations to those rules past the last year. The FSTB, in its consultation conclusions, said that all of the crypto exchanges should have the license if they intend to continue operating in Hong Kong.
It also said, “confining the services of a VA exchange to professional investors…. is appropriate at least for the initial stage of the licensing regime.”
The local financial technology and crypto industry are opposing the regulation, which is ceasing the exchanges from facilitating service offerings to retail investors. It is a warning that it can drive exchanges out of Hong Kong and push investors to more unregulated venues.
Regulators and governments in Asia have various attitudes to regulate cryptos and the exchanges on which they are trading. Under the regime of Singapore, crypto exchanges must have a license. However, it can have retail investors as clients.
China also came up with the announcement of a tougher ban on banks and payment companies, which are offering crypto services. It is furthering a selloff, which is briefly wiping $1 trillion off the crypto market capitalization.
The FSTB said that it intends to propose legislative changes to make its proposal turn into law in the upcoming session, i.e., 2021-22, of the legislative assembly of the city.