Hong Kong Commences Public Consultation on Retail Access to Cryptocurrencies

• As part of its policy statement issued on Monday, October 31st, the government of Hong Kong reiterated its commitment to developing a vibrant sector for virtual assets.
• The release comes as part of a fintech week which aims to repaint the country as a global hub for digital assets. 
• The city’s Securities and Futures Commission has expressed its willingness to review tokenized assets in future, and is seeking public input on the use of cryptocurrencies.
• Government officials such as Mr. Paul Chan and Mr. Christopher Hui have welcomed the developments.

As part of the measures aiming to revitalize its digital economy, Hong Kong has commenced consultations in regards to its plans to grant crypto access for retail investors.

In its Monday policy statement, the city government confirmed the plans, and revealed that regulators are exploring an array of pilot projects for testing the technological benefits and applications of virtual assets in the financial market. 

Notably, the stir in policy comes during the region’s ongoing fintech week, which aims to repaint the country as a global hub for digital assets. The Hong Kong government reportedly hopes that the ongoing Fintech week can serve as a catalyst to press home a series of policy statements, which officials believe will help revamp the city’s virtual sphere. 

In related developments, Hong Kong’s Securities and Futures Commission has called for public input in determining the means of access to cryptocurrencies by retail investors and affirmed its willingness to review tokenized assets in the future. 

The Government is open to future review on property rights for tokenised assets and the legality of smart contracts, so as to facilitate their development in Hong Kong. In addition, consultation outcome and next steps will be announced in due course by the Hong Kong Monetary Authority on the regulatory regime for stablecoins,” the statement read.

The agency’s Financial Secretary, Paul Chan, explained that the statement outlines the city’s approach, vision, and thoughts on investor exposure to crypto, as well as the regulatory regimes and pilot projects the agency is looking toward to embrace the potential financial and technological prospects of virtual assets.  

The policy follows the discovery made by a recent report that 58% of family offices (FOs) and high-net-worth individuals (HNWIs) are already investing in digital assets, while a further 34% plan to do so.

Hong Kong to Fully Explore DLT and Web 3.0 Technologies

Hong Kong’s Secretary for Financial Services and the Treasury, Christopher Hui, revealed that the city understands the potential represented by DLT and Web 3.0, and, according to Hui, these trends possess the capacity to become the future of finance and commerce. 

"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," Hui emphasized.

Industry heavyweight Sam Bankman-Fried, Chief Executive of the FTX crypto exchange, believes that Hong Kong’s steps today are “really promising”, but wishes that the region had taken this stance last year as Hong Kong’s previous actions had prompted an aggressive exodus.

On the Flipside

• Crypto.com, BitMEX, Bitfinex, OSL, and other exchanges are among the crypto industry’s global elites that started out in Hong Kong. Additionally, the world’s largest stablecoin, Tether, was also launched in Hong Kong. However, regulatory uncertainty in Hong Kong, coupled with its strict quarantine requirements led some crypto companies to relocate their operations.

Why You Should Care

Hong Kong’s position as a leading international financial center makes it a prime location for financial services. As a result, the government’s fresh push to embrace digital assets could play a key role in accelerating cryptocurrency adoption, not only in Southern China, but across all of Asia.