Hong Kong national flag. Neerav Bhatt/Flickr
The government of Hong Kong has proposed a number of policy changes for virtual assets that will promote the city as a global cryptocurrency hub, the Financial Services and Treasury Bureau said in a press release on 31 October.
During the opening of Hong Kong’s FinTech Week conference on Monday, the city government announced its plans to introduce a new licensing regime for global virtual asset service providers (VASPs), inviting them to set up their businesses in Hong Kong. Another proposed change will give retail investors a “suitable degree of access” to virtual assets. The secretary for Financial Services and the Treasury, Christopher Hui, said in a statement:
“We recognise the potential of DLT and Web 3.0 to become the future of finance and commerce, and under proper regulation they are expected to enhance efficiency and transparency. The Government is prepared to embrace this future, and we welcome the clustering of Fintech and VA community and talents in Hong Kong, and we will promote the sustainable development of financial services across the whole VA value chain.”
Hong Kong, a Special Administrative Region of China, had previously proposed that crypto trading be limited to professional investors, but received heavy criticism for stifling innovation. The city’s Securities and Futures Commission (SFC) is now ready to conduct a public consultation on how to give retail investors safe access to cryptocurrency trading through licensed VASPs.
The SFC will also change the way it sees tokenised securities, with deputy CEO Julia Leung noting they should no longer be classified as complex products, and will be treated in a similar way to existing financial instruments. The Hong Kong government will also review the legality of smart contracts, as well as undertake pilot programs on virtual assets such as non-fungible tokens (NFTs), green bond tokenisation, and the e-HKD (digital form of the local currency).
The Hong Kong government also noted it is “open to the possibility” of allowing exchange traded funds (ETFs) for major cryptocurrencies, such as Bitcoin (BTC) and Ether (ETH). In addition, the Hong Kong Monetary Authority (HKMA) will be tasked with the creation of a regulatory regime for stablecoins. Hong Kong’s Financial Secretary, Paul Chan, said in a statement:
“Our policy stance on VA is now clearly communicated to the global markets and it serves to demonstrate our commitment and determination to explore financial innovations together with the global VA community.”