In a move to reclaim its status as the world’s crypto hub, Hong Kong has outlined plans to allow retail investors to trade certain digital currencies on licensed exchanges.
On Monday, the Securities and Futures Commission (SFC) of Hong Kong published A consultation paper on its proposed regulatory regime for crypto trading platforms. The new regulations are due to take effect from June and will require all crypto platforms to be licensed by the SFC.
The regulator also said that retail investors will be allowed to trade certain “large-cap tokens” on licensed exchanges, given that safeguards such as knowledge tests, risk profiles and appropriate limits on exposure are put in place.
The agency did not specify which large-cap tokens would be allowed. However, a report by FT claims that bitcoin and ethereum, the two largest cryptocurrencies by market cap, will be opened up to retail customers.
The SFC has also put forward criteria for which cryptocurrencies will be available for trading. The exchange will be responsible for vetting the team behind the token, marketing materials, and legal risks to see “how resilient it is.” [the token’s network] is for common attacks.” Furthermore, the token must have a relatively large market capitalization.
The agency defined large-cap virtual assets as tokens “that are included in at least two ‘acceptable indices’ issued by at least two independent index providers,” one of which is recognized in the traditional financial sector. Must have experience.
It is worth noting that crypto exchanges must not store more than 2% of their customer assets in a “hot wallet”, which is a type of wallet that is available online. This is because these wallets are more vulnerable to hacks or phishing scams.
Hong Kong Turns Stance As Crypto Landscape Improves
The SFC first introduced its crypto regulatory framework in 2018, which prohibited retail investors from trading crypto. However, the SFC said that “the virtual asset landscape has changed significantly” since it first announced the regulatory regime.
In particular, the Hong Kong government has already allowed Retail investors have access to CME Group (CME) exchange-traded funds (ETFs) that invest in bitcoin and ether futures.
Ahead, Hong Kong raised $102 million The price of the digital green bond earlier this month. The sale marks the first tokenized green bond issued by a government, reflecting the government’s forward-looking stance on blockchain and DLT.
Nevertheless, Hong Kong’s move stands in stark contrast to mainland China where all forms of crypto-related transactions are banned. With the introduction of a more crypto-friendly regulatory environment in the city, some Chinese-founded Web3 companies in exile may move to Hong Kong to enjoy Chinese cheaper tech talent.
Hong Kong, once the crypto hub of the world, started losing Its position in mid-2022 is considered more favorable for the crypto industry amid growing concern about the city’s regulatory ambiguity over crypto and the emergence of potential rivals such as Singapore and Dubai.
“There was a time when Hong Kong had a leading position in cryptocurrencies and crypto-related business,” Padraig Walsh, a partner at Hong Kong law firm Tanner de Witt, said in September. “That’s not the case anymore, and I think regulation has been a significant part of the reason.”
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