Hong Kong will open its doors to crypto companies in less than a month. However, financial regulators have warned them not to expect an easy ride.
On May 9, Hong Kong Monetary Authority Chief Executive Eddie Yue said that regulations “will be tight.”
Speaking at the Bloomberg Wealth Asia Summit this week, he said that crypto companies are welcome, but they shouldn’t expect things to be easy.
“We will let them create the ecosystem here and that actually brings a lot of excitement. But that doesn’t mean light-touch regulation.”
Hong Kong is set to initiate a new licensing regime for virtual-asset service providers on June 1. Additionally, it plans to let retail investors trade major crypto assets. However, due to Beijing’s crypto crackdown, this opportunity will not be on the table for mainland Chinese traders.
Hong Kong Welcomes Crypto Companies
Yue added that further guidance for banks on servicing crypto clients is in the works. He said that the Securities and Futures Commission (SFC) will soon announce the results of its discussions on the scope of retail investor participation.
Under the new regulatory regime, permits will be issued for crypto asset platforms. Furthermore, a mandatory licensing regime for stablecoins is expected to be rolled out over the next year.
Hong Kong’s crypto guardrails have been very tight in the last few years. However, they have now been lowered to a “reasonable and sustainable level,” said Yue. Nevertheless, they will not allow the recurrence of any FTX-type event in the city.
Critics have commented that obtaining a virtual asset provider license in Hong Kong will be harder than elsewhere due to the stringent requirements.
There will be a lot of scrutiny of the tokens that can be listed for trading in Hong Kong. In addition to supply, demand, and liquidity checks, background checks on the issuers and developers will need to be carried out.
Market-making will not be permitted, and crypto exchanges will need to be fully insured to cover any risks or potential losses.
Uncle Sam Still in Reverse
Meanwhile, across the Pacific in the United States, the situation is going from bad to worse for crypto companies.
Bittrex has become the latest victim of the war on crypto. On May 8, the crypto exchange filed for Chapter 11 bankruptcy protection.
The move comes as the Securities and Exchange Commission has increased its enforcement assaults on pretty much all crypto exchanges in the country.
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Source: https://beincrypto.com/hong-kong-crypto-regulators-warn-road-wont-easy/