Hong Kong has recently issued a statement not only expressing its positive opinion towards digital assets but also expanding the scope of regulations. This could also become a testing ground for China, which has outlawed a lot of crypto-related business but might want to tap back into the growing market.
The Hong Kong government has issued a policy statement on the development of digital assets in the Special Administrative Region (SAR). The statement outlines government policy and approach to developing what it labeled a “vibrant sector and ecosystem” for crypto in Hong Kong. It appears to be an about-face from earlier this year when it wanted to strictly regulate crypto exchanges.
Hong Kong positive about crypto sector
The statement covers a number of key areas including vision and approach. The first move was to welcome crypto businesses with open arms. Hong Kong claims to be open and inclusive towards the global community for engaging all businesses related to digital assets. Furthermore, the government plans on setting up international standard risk mitigation guardrails while promoting sustainable innovation.
The Hong Kong Securities and Futures Commission (SFC) will be publically consulting on how to enable more crypto access for retail investors. Additionally, the government stated it will also be open to the possibility of having crypto exchange-traded funds (ETFs) on its markets. It doesn’t stop there. The Government is also open to future reviews of property rights for tokenized assets. Furthermore, it is researching the legality of smart contracts to facilitate their development. There will be a number of pilot projects according to the statement. These include non-fungible token (NFT) issuance for Hong Kong Fintech Week 2022 as well as Green bond tokenization and an e-HKD CBDC.
“Our policy stance on VA [virtual assets]is now clearly communicated to the global markets and it serves to demonstrate our commitment and determination to explore financial innovations together with the global VA community.”– Paul Chan, Financial Secretary of Hong Kong
Opening the door for China?
Last week, former BitMEX CEO Arthur Hayes hinted at a Hong Kong crypto embracement. He said that the move would likely open the door for China to re-enter the markets. This is likely to spur the next bull run, he added. Hong Kong may become a proxy testing ground for Beijing to experiment with crypto policy. Additionally, it may also serve as a conduit for Chinese money to flow back into digital assets.
“When [China] loves crypto, the bull market will come back. It will be a slow process, but the red shoots are budding.” – Arthur Hayes, Founder and ex-CEO of BitMEX