The head of the Hong Kong regulator called Bitcoin an alternative financial asset.

Having survived several boom and bust cycles over 15 years, Bitcoin has demonstrated its staying power as an alternative asset. This was stated by the head of the SFC of Hong Kong, Julia Leung.

She noted that she does not agree with the statements of “most central banks and economists” about the lack of intrinsic value of the first cryptocurrency.

“Moreover, it is clear that the underlying DLT technology is here to stay,” Leung added.

The CEO of SFC listed a number of advantages of using blockchain in the financial sector for tokenization of real assets and securities. In her opinion, this could potentially: 

  • increase their availability to retail investors through fractionation;

  • provide both transparency and confidentiality for the parties to the transaction, thanks to encryption;

  • reduce costs by increasing the efficiency of distribution, settlements, clearing and storage.

Leung acknowledged that to scale the DLT ecosystem, interoperability of financial institutions' blockchains and unified global regulation of the field are necessary.

She cited the government's issuance of digital green bonds, gold-based tokens, and the launch of spot cryptocurrency ETFs as successful examples of technology implementation in Hong Kong.

At the same time, Leung emphasized that the regulator’s support for the Web3 ecosystem “should not be taken as approval of virtual currencies as an asset class.”

“Currently they are highly speculative in nature with extreme price volatility. Therefore, in meeting investor demand, we have ensured that we take extensive measures to protect them,” said the head of the SFC.

Among the measures taken for this purpose, she named the licensing of centralized exchanges, as well as the ban on the use of unregulated trading platforms and custodians by ETF operators.

The SFC is also preparing rules for over-the-counter trading of cryptocurrencies and is considering introducing mandatory 100% collateral for stablecoins.

Recall that in 2023, the Hong Kong government created a task force to promote the development of Web3.

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