Hong Kong legalizes Bitcoin, Ethereum and Cardano payments
- Sources have specified that the authorities will allow trading of popular coins, such as Ethereum and Bitcoin.
- Last week, the director of licensing at Hong Kong’s Securities and Futures Commission (SFC) teased that retail could return to the city.
Hong Kong is taking a softer stance on cryptocurrencies and is currently looking at legalizing cryptocurrency trading. The city has decided to embrace crypto as it tries to secure recognition as one of the world’s biggest financial hubs.
Bloomberg reports that the city intends to begin in March launching a licensing program that is mandatory for all interested crypto outfits. According to anonymous sources, the license allows these platforms to offer retail to the general public. So far, the details of the city’s plans for crypto remain unclear. However, these sources have specified that the authorities will allow trading of popular coins, such as Ethereum and Bitcoin, without supporting anyone in particular. Specific details will be available after the government has completed public consultation on the matter.
The reactions are already following the news, especially among people who believe that the city government could not ignore the sector and its growing demand. According to crypto firm BC Technology Group Ltd. CEO Gary Tiu:
Introducing compulsory licensing in Hong Kong is just one of the important things regulators need to do. They cannot forever effectively shut down the needs of retail investors.
Last week, the director of licensing at Hong Kong’s Securities and Futures Commission (SFC) teased that retail could return to the city, contrasting the government’s seemingly hawkish stance on crypto. Speaking at an event, Wong, who also heads the SFC’s fintech unit, said the city’s government has been mulling a bill on crypto regulation. She also said it could allow interested people to “directly invest in virtual assets.”
Entry requirements
Hong Kong’s crypto community expects the government to provide more details at a fintech conference scheduled to start on Monday. In addition to allowing retail trade, the community is also expecting details on the plan to turn Hong Kong into a major crypto hub.
Among other things, the government will probably introduce requirements for the listing of crypto assets on stock exchanges. Sources expect the criteria to include factors such as liquidity, market capitalization and relationship to third-party crypto indices. The plan for a crypto hub may spur the authorities to make the requirements easy to scale in the hope that it will attract the desired attention.
Hong Kong was a crypto leader in the Asian market until a licensing requirement forced companies to limit institutional access to clients with a minimum of HK$8 million ($1 million) in their portfolios.
China’s possible influence
Although Hong Kong is a special administrative region of China that is allowed to maintain economic and financial autonomy, there are concerns that China’s near total aggressiveness towards crypto could be a problem. Last year, China banned all crypto business and has maintained this ban despite community protests.
According to BitMex co-founder Arthur Hayes, the success of crypto trials in Hong Kong still largely depends on China. In a recent blog postsHayes wrote:
As crypto investors, we care about Hong Kong’s ability to accommodate the needs of Chinese capital. Whether it is in retail sales or capital flows, it is the ordinary wealthy Chinese who drive the Hong Kong economy.
Hayes also says Beijing could change its mind and “repeal all these positive crypto policies”. Still, Hayes is optimistic that Hong Kong allowing crypto will solve critical problems for China.
