Hong Kong maintains stringent cryptocurrency regulations amidst market transformation
Hong Kong has restated its commitment to implementing strict and comprehensive regulations for cryptocurrencies in order to protect investors and combat financial crimes. In a blog post on February 2nd, Christopher Hui, Hong Kong’s Secretary for Financial Services and the Treasury, emphasized the region’s approach of “same activity, same risk, same regulation,” which led to the development of a licensing regime for virtual asset service providers (VASPs).
Hui noted that VASPs that were already operating in Hong Kong prior to the implementation of the new licensing system were given a transitional period to adjust to the regulatory framework. However, in order to continue their operations beyond this transition, these service providers are required to submit their licensing applications to the Hong Kong Securities and Futures Commission (SFC) by February 29th. The SFC plans to issue “no-deeming notices” to eliminate unqualified players from the market. Non-compliant entities will be required to cease their operations by May 31st.
Hui also highlighted the importance of regulating over-the-counter venues, which played a role in fraudulent activities involving unlicensed cryptocurrency platforms last year. He urged investors to exercise caution and only engage in transactions with platforms licensed by the SFC to avoid potential fraud.
Recently, Hong Kong approved certain platforms to offer Bitcoin (BTC) and Ethereum (ETH) trading to retail investors, subject to strict oversight from the SFC. Reports suggest that around ten firms are considering offering investment products in cryptocurrencies, with some already making progress and potentially launching the region’s first spot crypto ETFs in the coming months. HashKey, a certified Hong Kong crypto exchange, is in discussions with asset managers to potentially introduce spot crypto ETFs, leading to speculation that Bitcoin spot ETFs could be available by the first quarter of 2024. Harvest Fund Management’s Hong Kong operations have also reportedly started the process of launching a BTC ETF and have submitted a formal application to the SFC.
Despite its proximity to China, Hong Kong remains committed to maintaining its distinct legal system and is establishing a unique position in the cryptocurrency industry.
Read more: Hong Kong’s privacy watchdog is investigating Worldcoin over concerns about data privacy.
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