The People's Bank of China (central bank) recently released the (China Financial Stability Report (2024)), which focuses on the regulatory dynamics of cryptocurrencies in various countries, and specifically mentions that Hong Kong is 'actively exploring' a cryptocurrency licensing system. This stands in stark contrast to the stringent policies of the Chinese authorities that fully prohibit cryptocurrency trading, highlighting the policy divide between China and Hong Kong regarding cryptocurrency regulation.
The (China Financial Stability Report (2024)) released on December 28 mentions that, given the potential spillover risks of cryptocurrency assets to the stability of the financial system, regulatory authorities in various countries are continuously strengthening their regulatory efforts regarding cryptocurrency assets. Currently, 51 jurisdictions worldwide have implemented bans or restrictions on cryptocurrency assets, and some economies have adjusted existing laws or re-legislated regulations.
As early as September 2021, the People's Bank of China, in conjunction with multiple departments, issued a notice to completely prohibit cryptocurrency trading and mining activities within the country. However, in stark contrast, Hong Kong has taken a completely different attitude towards the cryptocurrency sector.
Since June 2023, Hong Kong has officially launched a licensing system for cryptocurrency trading platforms, allowing licensed platforms to provide trading services for retail investors. The report mentions that Hong Kong currently classifies cryptocurrency assets into two categories for regulation: 'securitized financial assets' and 'non-securitized financial assets', implementing a distinctive 'dual licensing' system for cryptocurrency trading platform operators. 'Securities-type tokens' are subject to regulation and licensing under the (Securities and Futures Ordinance); 'non-securities-type tokens' are subject to regulation and licensing under the (Anti-Money Laundering Ordinance). Institutions engaged in virtual asset businesses must apply for a registration license from the relevant regulatory authorities to operate.
At the same time, the Hong Kong government has also requested large financial institutions such as HSBC and Standard Chartered to include cryptocurrency exchanges in their daily customer regulatory scope.
In addition, the People's Bank of China also pointed out in the report: 'The correlation between cryptocurrency asset activities and systemically important financial institutions, core financial markets, and market infrastructure is limited, but as the application scenarios of cryptocurrency assets increase in payments and retail investments, cryptocurrency assets may pose risks in some economies.'
To this end, the Financial Stability Board (FSB) and relevant standard-setting bodies jointly formulated a global regulatory framework for cryptocurrency assets, guided by the principle of 'same activities, same risks, same regulations' to help regulatory authorities address financial stability risks related to cryptocurrency assets.
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The article 'The People's Bank of China is concerned about cryptocurrency regulation! It specifies Hong Kong's licensing system, but the mainland is still banning trading' was first published in 'Crypto City'