Hong Kong reportedly wants to legalize crypto trading

Hong Kong is taking steps to reclaim its status as a global cryptocurrency hub by launching several legal initiatives related to the crypto industry.

Hong Kong is a city and a special administrative region of China, and is willing to separate its crypto regulatory approach from the general crypto ban in mainland China.

The Hong Kong government is considering introducing a separate 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 to allow retail investors to “directly invest in virtual assets,” Wong said during a panel held by InvestHK, the South China Morning Post reported on October 17.

Such an initiative would mark a significant shift from the SFC’s stance over the past four years, which restricted crypto trading on centralized exchanges to professional investors, Wong noted. Eligible investors include individuals with a portfolio worth at least $1 million, or approximately 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 it’s time to change the city’s attitude toward crypto, saying:

“We think that this may actually be a good time to really think carefully about whether we want to continue with this requirement for professional investors.”

The SFC official also mentioned a few other legal initiatives aimed at developing 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 considered whether to allow retail investors to invest in crypto-related exchange-traded funds, Wong noted.

The latest news comes amid Hong Kong, on October 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 a tense political climate.

Related: Bank of China: Digital yuan transaction volume exceeded $14 billion

According to an official statement from 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’s authorities also plan to embrace new technologies such as non-fungible tokens and the metaverse and develop Hong Kong into an “international center for virtual assets.”

According to some reports, Hong Kong has already been successful in terms of crypto adoption so far. Taking into account a number of factors such as crypto ATM installations, pro-crypto regulations and startup culture, Hong Kong was ranked as the best prepared country for widespread crypto adoption in a study by Forex Suggest published in July 2022.