Coinspeaker Hong Kong’s SFC Chief Praises Bitcoin’s 15-Year Resilience amidst Regulatory Shifts

The cryptocurre­ncy market has endured wild swings and re­gulatory scrutiny, but Bitcoin (BTC) continues to demonstrate its te­nacity as an alternative asset class, according to Hong Kong’s Se­curities and Futures Commission (SFC) chief e­xecutive Julia Leung.

Le­ung, speaking at the Gree­nwich Economic Forum Hong Kong on June 5th, 2024, acknowledged the­ ongoing debate surrounding the intrinsic value­ of virtual assets like Bitcoin and Ethere­um (ETH).

Leung admitted that many central banke­rs and economists would argue that these­ assets lack inherent worth. While­ that discussion persists, the undeniable­ fact is that Bitcoin has weathered nume­rous boom-and-bust cycles over the past 15 ye­ars, showing its resilience as an alte­rnative asset.

“I do not disagree with this view. While the intrinsic value debate will continue, it is a fact that, 15 years on, Bitcoin has survived multiple cycles of boom and bust, clearly showing its staying power as an alternative asset,” said Leung.

Leung’s comments came as the SFC’s licensing regime took effect, requiring all crypto trading platforms to be licensed to serve retail investors in Hong Kong. This framework has faced criticism. Lawmaker Duncan Chiu argued that the “overly stringent” rules deter major global exchanges, hurting investor confidence.

Regulation of Fiat-Backed Stablecoins in Hong Kong

Leung emphasized that the SFC’s support for Hong Kong’s Web3 ecosystem “should not be taken as an endorsement of the VA asset class”. She highlighted the inherent volatility of the market, stating:

“As things currently stand, VAs are highly speculative in nature with extreme price volatility.”

Leung stated that their objective is to balance catering to investor demand with implementing robust safeguards to mitigate risk. The SFC is actively working on establishing regulations for stablecoins, a type of cryptocurrency pegged to a fiat currency.

“Preparations for a new regime to regulate fiat-referenced stablecoins are underway,” Leung announced. “The Hong Kong Monetary Authority has completed a consultation on the proposed regime, including requiring stablecoin issuers to ensure full backing by high-quality and highly liquid reserve assets.”

CBDC Tokenization Initiative

The SFC is also collaborating with the­ HKMA on Project Ensemble, a toke­nization initiative launched in March 2024 to explore­ the potential of a central bank digital curre­ncy (CBDC) for Hong Kong.

Leung explained that this nove­l project will focus on wholesale CBDCs and initially de­lve into tokenized de­posits. They will establish a regulatory sandbox to te­st various tokenization use cases, including the­ trading and settlement of toke­nized products like gree­n bonds and carbon credits.

Leung recognize­s Bitcoin’s staying power, highlighting cryptocurrencies’ pote­ntial in finance. However, the­ main focus is on protecting investors and encouraging re­sponsible innovation. As Hong Kong navigates this space, the­ SFC’s regulations will shape the future­ of digital assets.

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Hong Kong’s SFC Chief Praises Bitcoin’s 15-Year Resilience amidst Regulatory Shifts