Hong Kong to conduct public consultation on retail crypto trading, ETFs

Hong Kong’s Securities and Futures Commission is set to conduct a public consultation on how to give retail investors access to digital assets.

Although crypto exchanges are allowed to operate in the territory under current rules, access is limited to investors with portfolios of at least HK$8 million ($1 million).

The consultation will also examine the possibility of offering digital asset-based exchange-traded funds (ETFs) in the region.

The move comes in stark contrast to the actions of mainland China; The People’s Bank of China (PBOC) enforced a general prohibition on all cryptocurrencies in September 2021, a position it has given no indication it is set to relinquish.

In addition, Hong Kong’s regulator said it is open to future assessments of property rights for tokenized assets and the legality of smart contracts, and that it is investigating a number of pilot projects to test the potential benefits of digital assets and their applications in the financial sector. markets.

These projects are said to include non-fungible tokens (NFT) issue for Hong Kong Fintech Week 2022, green bond tokenization and Hong Kong’s own central bank digital currency (CBDC).

The regulator said it is ready to “engage with the exchange of digital assets globally” and invited them to “set foot in Hong Kong for new business opportunities” under its new licensing regime for VA service providers.

Hong Kong’s struggling economy

The news comes as Hong Kong’s economy may be faltering, at least relatively.

Territory’s GDP fell 4.5% in the third quarter of 2022which some have attributed to disruptions in cross-border land cargo operations, as the region’s Covid-19 restrictions remain incredibly strict by international standards.

Hong Kong’s position as a financial center may also be changing. The city fell to fourth place in Global Financial Centers Index’s top fivewith Singapore, its rival economic hub in the region, taking its place.

The city’s stock market, the Hang Seng index, is down nearly 35% so far in 2022, and Hong Kong lifted its hotel quarantine only last month.

The news comes as Singapore also deals with the challenges of regulating and bringing in new crypto exchanges.

According to reporting from Nikkei Asia170 companies applied to the Monetary Authority of Singapore (MAS) for licenses to provide digital payment token services, and 100 were rejected.