Head of Hong Kong’s Securities and Futures Commission, Julia Leung Fung-yee says crypto trading is an integral part of the digital asset ecosystem. She stated this while explaining why Hong Kong has flung its doors open to cryptocurrencies in its regulatory approach.
Leung said that the new licensing system for virtual asset providers will ensure that investors are protected and at the same time try to make the environment conducive for crypto companies to thrive. According to her, this is the only way to embrace innovation and strengthen market trust after FTX collapse.
Hong Kong had last year November included crypto service providers in the list of financial institutions to be regulated following the collapse of FTX. Other countries such as Australia have also taken a cue and are working to ensure the safety of investors while also protecting centralized crypto exchanges.
Hong Kong’s new rules emphasize strict compliance to ant-money laundering (AML) guidelines and investor protection laws to virtual exchanges looking to open a business in Hong Kong. Nonetheless, it also provides a level playing field for crypto exchanges and other startups.
Hong Kong Embraces Crypto
While Hong Kong is committed to protecting investors under its watch, the administrative region of China has also shown once and again that it is a welcoming place for crypto. Aside its crypto-friendly regulations which it released recently, Hong Kong has demonstrated openness to crypto in other ways.
A lawmaker from Hong Kong recently extended an open invitation to crypto companies around the world to come and apply for operational licenses in the region. This led to a lot of attention being drawn to the place.
The SFC chief still making a case for crypto at this time is therefore hardly surprising because the government definitely wants crypto properly integrated into its system to ensure proper harnessing of crypto innovation.
Already, several crypto exchanges and other companies have either moved to Hong Kong or opened an office there. In the coming months, this trend is likely to continue as pressure continues to mount on the industry in other jurisdictions such as the US.
Hong Kong’s Cyberport
As part of efforts to turn Hong Kong into a crypto hub indeed, the government has created a digital hub for crypto and other companies. Referred to as Cyberport, the government created the hub to promote innovation.
Since its creation, at least 150 web3 companies have found a home there. The government had voted the equivalent of $7 million for developing web3, and the Cyberport is part of it. This leaves many questions hanging as to why other countries such as the US are doing everything they can to kill crypto innovation in their domains.
Other jurisdictions following this approach are Australia and Dubai, both of which are leading with friendly regulation. While none of these countries are taking investor safety for granted, they are also ensuring that innovation is allowed to thrive rather being destroyed in the name of regulation.
With such environments, investors will be protected, and the industry will also be positioned to offer the best quality services to customers.