Hong Kong’s crypto licensing regime is expected to launch next month

Hong Kong’s long-awaited crypto licensing regime is expected to launch next month.

Hong Kong is fighting to become a crypto hub, and will issue guidelines for crypto exchanges that want to launch there in May, per Bloombergciting Hong Kong’s Securities and Futures Commission (SFC) chief executive Julia Leung.

Speaking Thursday at an event, Leung said the regulatory framework for crypto exchanges received over 150 responses during the public consultation process.

The public consultations launched last year sought to find the best way to give retail investors access to cryptocurrencies, as well as explore the possibility of offering crypto exchange-traded funds (ETFs) in the territory.

The new rules are also expected to allow retail investors to trade major cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH) June 1.

While crypto exchanges are currently permitted to operate in Hong Kong, investors with portfolios below HK$8 million, or roughly $1 million, are subject to certain restrictions under existing legislation.

The regulator is also conducting several pilot projects to assess the benefits of digital assets and their applications in financial markets, including the tokenization of green bonds and the development of Hong Kong’s own central bank digital currency (CBDC).

The SFC did not immediately respond Decryptits request for comment.

Hong Kong seeks to become Asia’s leading crypto hub

Despite Hong Kong’s efforts to adopt a more relaxed approach to cryptocurrencies, questions remain about what impact it might have on the industry’s relationship with mainland China, where cryptocurrency trading and Bitcoin mining were first banned in 2017.

BitMEX founder and former CEO Arthur Hayes also weighed in last year, stating that access to Chinese customers will be crucial to Hong Kong’s appeal to crypto companies.

“Hong Kong’s position as the main crypto hub began to decline gradually at first, and then rapidly with the introduction of their zero-COVID policy. But now something strange seems to be happening,” he wrote, adding that “it it is the ordinary wealthy Chinese who drive the Hong Kong economy.”

The Hong Kong authorities seem confident that their efforts will also pay off.

“Hong Kong is well-positioned to be a leading hub for Web3 in Asia and beyond, and we place great emphasis on virtual assets and Web3,” said Christopher Hui, Minister of Finance and Finance Minister Christopher Hui last month.

According to Hui, Hong Kong had received interest from over 80 companies that wanted to establish a business there. These included exchanges, blockchain infrastructure firms, security companies, wallets and payment providers.

Nikkei Asia also reported last month that several Chinese crypto companies, including securities firms and banks interested in allowing clients to trade Bitcoin and Ethereum on licensed exchanges, are eyeing Hong Kong.

Cryptocurrency exchange Bitget, meanwhile, has announced the launch of a new trading platform for its Hong Kong users. According to last week’s statement, BitgetX Hong Kong intends to apply for the license under the Hong Kong Virtual Asset Service Provider (VASP) regime.