hong kong~ launched a new crypto regulatory regime to foster a digital asset hub, a hub that has sparked curiosity but has yet to secure major investment commitments from a chastened industry by a market crash last year. Crypto exchanges can offer trading services to people and institutions from Thursday if they obtain licenses to protect investors from dangerous practices in the 2022 crash.
Last month, the SFC advised licensed platforms to “comply with a range of robust investor protection measures covering onboarding, governance, disclosure and due diligence and admission of tokens, before providing trading services to retail investors”. Joey Garcia, head of legal and regulatory relations at Xapo Bank, says standards for retail investor access are stricter than in most jurisdictions. Garcia doubts platforms are ‘rushing to Hong Kong to take advantage of the setting’
The months-long framework is launched as crypto firms search the world for acceptable sites amid a US crackdown. Hong Kong and Dubai want businesses, while Singapore wants to limit retail investors. The EU adopted the most comprehensive standards for digital assets in April. Huobi, OKX and Amber Group plan to apply for licenses under the framework, and the Securities & Futures Commission has received dozens of applications.
Last year, Hong Kong announced the policy change aimed at restoring its status as a financial center. If Beijing lifts its 20-month crypto trading ban, the city could become a gateway to Chinese wealth. Asked by Bloomberg News, 15 key digital asset companies – exchanges, crypto lenders and stablecoin issuers – declined to discuss Hong Kong’s investment intentions. Binance, Coinbase, Bybit, and Huobi dominated crypto trading volumes.
Potential investors are cautious about building virtual asset trading platforms in Hong Kong,” said Vince Turcotte, chief digital asset officer at regulatory technology firm Eventus, which works with some license applicants. “They want to avoid burning money.” Retail investors in Hong Kong can trade larger coins like Bitcoin and Ether that appear in at least two investment indices from independent vendors, one with experience in the financial sector.