Hong Kong is taking action to regain its status as a global cryptocurrency hub by launching several legal initiatives related to the crypto industry.
A city and special administrative region of China, Hong Kong is willing to distinguish its crypto regulation approach from the blanket crypto ban in mainland China.
The government of Hong Kong is considering introducing its own bill to regulate crypto in its own China-free way, according to Elizabeth Wong, head of the fintech unit at the Securities and Futures Commission (SFC).
One of the SFC’s initiatives is allowing retail investors to “directly invest into virtual assets,” Wong said during a panel held by InvestHK, the South China Morning Post reported on Oct. 17.
Such an initiative would mark a significant shift from the SFC’s stance over the past four years, which restricts crypto trading on centralized exchanges to professional investors, Wong noted. Eligible investors include individuals with a portfolio worth at least $1 million, or about 7% of the city’s population, as of September 2021.
Wong emphasized that the crypto industry has become more compliant over the past four years, suggesting that it’s time to change the city’s stance on crypto, stating:
“We think that this may be actually a good time to really think carefully about whether we will continue with this professional investor-only requirement.”
The SFC official also mentioned a few other legal initiatives targeting the development of the crypto ecosystem in Hong Kong, including a policy introduced in January to allow service providers to sell certain crypto-related derivatives. The regulator has also been reviewing whether to allow retail investors to invest in crypto-related exchange-traded funds, Wong noted.
The latest news comes amid Hong Kong on Oct. 19 launching a $3.8 billion fund to attract foreign businesses back to the city after a massive talent exodus prompted by strict lockdowns and tense political climate.
According to an official statement by the government of the Hong Kong special administrative region, the local government has introduced a bill to propose establishing a regulatory regime for virtual asset service providers. The city authorities also plan to embrace emerging technologies like nonfungible tokens and metaverse and develop Hong Kong into an “international virtual assets center.”
According to some reports, Hong Kong has already been succeeding in terms of crypto adoption so far. Considering a number of factors like crypto ATM installations, pro-crypto regulations and startup culture, Hong Kong was ranked the best-prepared country for widespread crypto adoption in a study by Forex Suggest published in July 2022.