Hong Kong’s Crypto Hub Aspirations Get Beijing’s Seal Of Approval
As Hong Kong considers throwing open crypto trading to retail investors, the Chinese government is reportedly subtly supporting the idea. This is eye-catching because it follows Beijing’s complete ban in 2021 on all crypto-related transactions in mainland China.
Hong Kong Wants To Become A Crypto Hub
After blocking retail crypto traders in 2018, Hong Kong now looks ready to invite them back in on digital assets.
A new consultation paper from the Securities and Futures Commission of Hong Kong (SFC) proposes “to allow all types of investors, including retail investors, to access trading services provided by licensed VA [virtual asset] trading platform operators.”
However, there are a number of conditions that must be met before crypto trading is reintroduced to retail investors. For one, the SFC suggested trading platforms would conduct due diligence on the team behind a token and also establish how resistant the token’s network is to common attacks, so as to ensure only pre-approved tokens are made available to traders. The proposal also recommends setting limits to how much exposure retail traders are allowed.
The SFC is further proposing that only “large-cap virtual assets” be listed for trading. Although the Commission did not clarify which large tokens would be eligible for listing, a spokesperson from the securities watchdog suggested it would likely be bitcoin and ether.
Hong Kong Gets Subtle Endorsement From Beijing
Interestingly, Hong Kong has won soft backing from Beijing, according to a Feb. 21 Bloomberg report citing people familiar with the matter. Officials from China’s Liaison Office have reportedly been attending Hong Kong crypto gatherings in a bid to understand what is happening in the city.
Their encounters with Beijing officials regarding the matter have been rather friendly so far, which is being seen by local stakeholders as a sign that Beijing endorses — albeit subtly — Hong Kong’s desire of becoming a regional crypto hub and is open to using the city as a testing ground for crypto assets.
This most recent move comes after months of intense volatility in the cryptocurrency market, with the ugly implosion of digital asset exchange FTX being the latest blow.
Bitcoin, the market’s most valuable crypto, is down roughly 63.70% since hitting a lifetime high in November 2021 — while many so-called altcoins have faired even worse.
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