Officials in Hong Kong are trying to woo businesses after years of strict pandemic controls and a political breakdown that has hammered the financial hub’s economy
Philippe LOPEZ
Text size
Hong Kong is “back in business” and investigating whether to legalize crypto trading by retail investors, the city’s finance chief announced on Monday, kicking off a week of conferences aimed at reviving the Chinese hub’s image.
Unlike mainland China where crypto has been almost banned, Hong Kong wants to relax regulations and bring back some of the business that has left.
Years of strict pandemic controls and a political breakdown have hammered the economy of the Asian financial hub and triggered an exodus of talent that authorities say they now want to reverse.
A fintech conference opened on Monday and will be followed on Wednesday by a finance summit with the participation of some of the world’s best bankers.
“Hong Kong is open and inclusive to the global community of innovators engaging in virtual asset businesses,” Finance Secretary Paul Chan told delegates at the fintech conference.
“In very many ways, we are telling the world that we are back in business,” he added, in a speech that had to be delivered remotely after he caught Covid last week during an overseas trip.
In a new policy statement, the government said it would launch a consultation to explore how the retail segment “can be provided with an appropriate degree of access”. It added that Hong Kong was willing to review “property rights for tokenized assets and the legality of smart contracts”.
Currently, Hong Kong limits exchanges to clients with portfolios of at least HK$8 million ($1 million).
Extending the permission to retail investors will allow far more permanent residents to invest in cryptocurrencies and virtual assets. But that carries its own risks.
There has been a global push to regulate the crypto market and protect investors after wild swings and a series of high-profile collapses.
Critics say crypto is an ideal tool for generating investment bubbles, hiding illicit wealth and enabling fraud.
China, once one of the world’s largest crypto markets, banned digital currency transactions in 2021.
Singapore has recently strengthened regulations around retail transactions after a number of crypto exchanges imploded, including in the city-state.
Meanwhile, Japan has recently relaxed some of its more conservative rules for listing tokens.
Given its position as a gateway for China to the international markets, Hong Kong was initially something of a crypto hub.
The city then introduced a voluntary licensing regime in 2018 for major exchanges, but only two were approved for permits – BC Technology and HashKey.
One of the biggest exchanges that used to be in the city, FTX, moved to the Bahamas last year.
