Hong Kong plans to revise crypto rules amid major exchanges withdrawing due to strict regulations.
New SFC mandate requires all crypto platforms in Hong Kong to be licensed starting June 1.
Licensed entities in HK can distribute crypto products without altering their license conditions.
Amidst evolving market conditions, Hong Kong’s finance officials are set to revisit the cryptocurrency regulation framework. Christopher Hui, the Secretary for Financial Services and the Treasury, emphasized this adaptive approach during a parliamentary session. He remarked, “We will keep in view market developments and review the requirements on VA-related activities as appropriate.”
Recent Withdrawals Prompt Regulatory Rethink
The need for this reassessment has become more apparent following the withdrawal of several major crypto exchanges from the Hong Kong market. Platforms such as OKX, Gate.io, and HTX have opted out of their license applications, a movement sparked by what many have perceived as overly stringent regulations.
HONG KONG TO MONITOR CRYPTO REGULATIONS, SAYS TREASURY CHIEFDuring parliamentary questioning, Christopher Hui stated that the Hong Kong Monetary Authority and the Securities and Futures Commission would review the requirements for Virtual Aseet-related activities as… pic.twitter.com/gJhd6ngoN5
— Mario Nawfal’s Roundtable (@RoundtableSpace) July 3, 2024
This mass withdrawal preceded the new mandate that, starting June 1, all operating crypto trading platforms in Hong Kong must secure a license from the Securities and Futures Commission (SFC), or be deemed-to-be-licensed.
Additionally, Hui noted that the existing regulatory framework allows licensed corporations or registered institutions to distribute crypto-related products after merely notifying the regulators. This process does not require an application for modification of licensing conditions, simplifying operations for current license holders.
Moreover, concerns have been raised by local lawmakers about the pace and flexibility of the regulatory process. Duncan Chiu, a Hong Kong lawmaker, expressed worries about the “excessively stringent” licensing regulations, suggesting they have deterred global exchanges and shaken confidence in Hong Kong’s ambition to be a leader in the Web3 arena.
The government’s intention to modify regulations aligns with a broader strategy to ensure that Hong Kong remains competitive in the fast-paced digital asset industry, fostering an environment conducive to technological and financial innovation.
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