SNEAK PEEK
Hong Kong’s slow regulatory pace may hinder its growth as a global crypto hub.
Industry leaders urge Hong Kong to expedite crypto regulations to stay competitive.
Banks in Hong Kong remain cautious on crypto custody, lagging behind UAE’s proactive approach.
Hong Kong’s deliberate and measured pace in implementing cryptocurrency regulations is drawing scrutiny as industry players express concerns that it may impede the city’s growth as a global digital asset hub.
Despite efforts to position itself as a leader in the cryptocurrency space, Hong Kong’s regulatory framework remains limited, with only two fully licensed virtual asset trading platforms currently operational, Hash Blockchain and OSL Digital Securities. Meanwhile, many other exchanges are still awaiting approval to operate in the city.
Vincent Chok, CEO of Hong Kong-based First Digital Trust, emphasized the need for Hong Kong to speed up its regulatory processes to keep pace with the rapidly evolving digital asset industry.
“It is understandable that Hong Kong’s current approach to regulation is more conservative, prioritizing investor protection,” Chok stated in an exclusive interview with Cointelegraph. However, he expressed concern that the city could fall behind if regulations do not keep up with the fast-paced developments in the industry.
As of June 1, Hong Kong has made it a criminal offense to operate an unlicensed virtual asset trading platform (VATP). Additionally, the Securities and Futures Commission (SFC) has issued an “alert list,” identifying suspicious or unlicensed entities that may be targeting Hong Kong investors.
In comparison to Dubai, which has adopted a more global approach to cryptocurrency regulation, Hong Kong has yet to implement regulations for USD-denominated stablecoins. First Digital Trust, which was recognized as one of the Emerging Giants in Asia Pacific by KPMG and HSBC in 2022, is keenly awaiting such regulations.
Chok expressed hope that Hong Kong will soon introduce a framework for USD-denominated stablecoins, similar to the proactive stance taken by Dubai.
Meanwhile, the Hong Kong Monetary Authority (HKMA) recently recognized Jingdong Coinlink Technology Hong Kong Limited, a subsidiary of JD Technology Group, as a participant in The Sandbox program. This move follows the company’s announcement to launch a stablecoin pegged 1:1 to the Hong Kong dollar (HKD), signaling the city’s growing interest in stablecoin development.
With regard to digital asset custody, Chok also explained that banks in Hong Kong would still not immediately indulge due to the risk and liability involved; it is more than the current risk appetite of many would allow. This reserved approach is quite the opposite of what happened to Standard Chartered, which has recently been approved to provide crypto custody services in the United Arab Emirates.
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