A senior Hong Kong official warned cryptocurrency exchanges to expect tough regulation and advised opponents to go elsewhere.
Hong Kong has stated that its upcoming cryptocurrency regulation will not promote a light-hearted approach despite the city’s crypto-friendly disposition. China’s special administrative region is finalizing rules for licensing digital assets in its quest to become a global cryptocurrency hub.
Speaking at the Bloomberg Wealth Asia Summit on Tuesday, Hong Kong Monetary Authority Chief Executive Eddy Yue Man warned:
Our regulations will be strict.
Yue added that cryptocurrency players opposed to the new licensing system could go elsewhere.
The HKMA CEO’s comments come just weeks before Hong Kong implements new regulation and licensing rules for cryptocurrency exchanges. The city has joined a growing number of governments around the world embracing the crypto industry despite last year’s crashes. Hong Kong, in particular, has re-emerged as an attractive destination for cryptocurrencies compared to mainland China which remains largely conservative in digital assets. Last October, the Chinese special administrative city announced plans to become a global virtual asset hub.
According to this agenda, Hong Kong will launch its own licensing system on June 1st. Despite Hong Kong’s intention to “allow the (cryptocurrency) industry to evolve and innovate,” government officials who are preparing to exercise oversight in the industry say the rules will be strict. According to Ed Yu, “They will let them create the ecosystem here, which actually brings a lot of excitement. But this does not mean light regulation.”
Hong Kong previously proposed crypto regulation to take advantage of digital asset adoption and spur growth
In February, the Hong Kong Securities and Futures Commission (SFC) proposed new rules governing retail participation in cryptocurrency trading. The securities watchdog has proposed allowing retail investors to buy tokens, such as Bitcoin (BTC) and Ether (ETH), on licensed virtual asset platforms. According to the SFC, such permitted conditions would put Hong Kong at the forefront of financial progress. Moreover, the SFC considered that supporting digital currencies with a large market cap would stimulate the city’s nascent economy.
The SFC is preparing the regulatory framework for cryptocurrencies, which includes guidelines for banks that deal with crypto clients. These rules call for a mandatory regulatory license for all centralized digital asset trading platforms in Hong Kong. Moreover, the rules also require that cryptocurrency exchanges that market their services to Hong Kong investors secure regulatory authorization. In addition, Eddy Yu said that the Hong Kong government entity will soon reveal the extent to which retail investors can participate.
HKMA is also preparing a mandatory licensing scheme that covers stablecoin-related activities in the coming year. Currently, written rules require the value of the backup asset to always equal the value of the token.
Eddy Yu commented on Hong Kong’s comprehensive and tight regulatory framework for all types of digital assets, saying:
“What we want to do in Hong Kong is say, hey, this trend is going to continue. Let’s put in place the right regulatory framework using the principle of same activity, same risks, same regulation.”
Moreover, the CEO of HKMA believes that the legislative framework for digital currencies will provide transparency and clarity to the sector.
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Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify cryptocurrency stories down to the bare essentials so that anyone anywhere can understand without much background knowledge. When he’s not deep into cryptocurrency stories, Tolo enjoys music, loves to sing, and is a movie lover.