The Chinese government is apparently gently backing Hong Kong's decision to offer crypto trading to regular investors. This is notable since it follows Beijing's full prohibition on all crypto-related transactions in mainland China in 2021.
Hong Kong Wants To Become A Crypto Hub
Hong Kong appears to be poised to reintroduce retail crypto trading after barring them in 2018.
The Securities and Futures Commission of Hong Kong (SFC) has issued a new consultation paper proposing "to allow all sorts of investors, including retail investors, to access trading services provided by licenced VA [virtual asset] trading platform providers."
But, a number of requirements must be completed before ordinary investors may resume trading in cryptocurrency. For example, the SFC proposed that trading platforms undertake due diligence on the team behind a token as well as determine how resistant the token's network is to typical assaults, ensuring that only pre-approved tokens are made available to traders. The plan also suggests limiting the amount of exposure available to retail dealers.
Furthermore, the SFC proposes that only "large-cap virtual assets" be listed for trade. Although the Commission did not specify which major tokens would be eligible for listing, a representative for the securities watchdog said that bitcoin and ether would most likely be among them.
Hong Kong Gets Subtle Endorsement From Beijing
According to a Feb. 21 Bloomberg story citing persons familiar with the situation, Hong Kong has received soft support from Beijing. Representatives from China's Liaison Office are said to have been visiting Hong Kong crypto events in order to better grasp what is going on in the city.
Their interactions with Beijing authorities on the subject have thus far been amicable, which local players see as a hint that Beijing supports — if quietly — Hong Kong's goal to become a regional crypto hub and is willing to use the city as a testing ground for crypto assets.
This current move comes after months of high volatility in the cryptocurrency sector, with the latest blow being the dramatic implosion of digital asset exchange FTX.
Bitcoin, the market's most valued cryptocurrency, has fallen around 63.70% since reaching a lifetime high in November 2021, with several so-called altcoins faring considerably worse.