Hong Kong's government proposes allowing retail investors to trade in cryptocurrencies

10/31/2022, 06:32 AM
Hong Kong's government proposes allowing retail investors to trade in cryptocurrencies
The government of Hong Kong has proposed allowing retail investors to trade in cryptocurrencies and crypto exchange-traded funds. This move is seen as an effort to help rebuild its fintech hub status. The city had previously proposed limiting crypto trade to professional investors, but this was heavily criticised for stifling innovation.

Authorities will start a consultation process on giving retail investors “a suitable degree of access” to virtual assets. This is seen as a positive move, as it demonstrates a determination to explore fintech with the global virtual asset community.
The government will also review property rights for tokenised assets and explore legalising so-called smart contracts. These moves are likely to pave the way for real estate security token offerings (STOs).

Legalising retail crypto trade would set Hong Kong further apart from mainland China which has a imposed a blanket ban on cryptocurrency trade. This is a positive move, as it sends out a strong message that Hong Kong is taking a different approach in regulating its capital market.

We believe that this is a very positive move that could potentially help Hong Kong regain its status as a fintech hub. It is important to have a clear and consistent regulatory regime in place in order to protect investors and prevent bad actors from exploiting loopholes.
Legalising retail crypto trade would also set Hong Kong apart from mainland China, which has a blanket ban on cryptocurrency trade. This is a positive step that could help to encourage innovation and attract more businesses to the city.

Dan Martin, CEO of B2Broker, a cryptocurrency liquidity provider, who is also based in Hong Kong, said: “This is a sensible and pragmatic approach by the SFC. It demonstrates a willingness to work with, rather than against, the industry.”
Martin, who is originally from the UK, said it was telling that the UK’s financial regulator has taken a similar stance, with the Financial Conduct Authority preparing to roll out similar guidance by the end of the year.

“This is a very positive step for the fintech industry in Hong Kong, and I believe it will help to attract more businesses to the city.”
Martin said that the SFC’s guidance “strikes the right balance” between protecting investors and encouraging innovation, and added that he believes it will help to boost Hong Kong’s position as a fintech hub.

The SFC’s guidance is non-binding, but Martin said he believes it will be influential in shaping the regulatory environment for cryptocurrency in Hong Kong.

“I believe that this is a very positive move that could potentially help Hong Kong regain its status as a fintech hub,” he said.

“It is important to have a clear and consistent regulatory regime in place in order to protect investors and prevent bad actors from exploiting loopholes. Legalising retail crypto trade would also set Hong Kong apart from mainland China, which has a blanket ban on cryptocurrency trade. This is a positive step that could help to encourage innovation and attract more businesses to the city.”