Hong Kong Pursues Its Goal to Revive the Crypto Sector

Hong Kong remains steadfast in its pursuit of becoming Asia’s digital-asset hub despite the catastrophic fallout from the collapsed crypto exchange FTX.

In a new report by Bloomberg, the city said that it’s going forward with becoming a global crypto hub and says it will learn lessons from the collapse of the crypto market in 2022, which saw $2  trillion wiped from the market, and will use that to establish a regulatory framework that will protect investors and encourage growth within the sector. 

Hong Kong Seeks to Restore its Reputation as a Financial Hub

Recently Hong Kong became vocal about its intentions to foster the crypto sector as part of an effort to restore the city’s reputation as a financial center. Hong Kong’s financial secretary, Paul Chan, spoke at a Web3 forum and said that Hong Kong is a good place for cryptocurrency, financial technology, and other startups to set up shop. Singapore was previously known for being somewhat of a crypto-haven but has taken a step back by introducing numerous measures that make it difficult for crypto-related firms to set up shop, and Hong Kong is keen to step in and take advantage of this opportunity.

According to Bloomberg’s report, Matrixport Technologies Pte, a crypto lender with 300 staff, is one of many firms assessing the city’s “evolving rulebook.” Matrixport Technologies is headquartered in Singapore, which, as said before, is now so wary of digital coins that it may introduce an outright ban against retail-token lending. The report cites people familiar with the matter, who have said that Matrixport is evaluating the possibility of setting up shop in Hong Kong even as it awaits the outcome of its Singapore virtual-asset license application.

Not long after Chan spoke out about the city’s intention of becoming the crypto hub it formerly was, Hong Kong’s Secretary for Financial Services and the Treasury, Christopher Hui, made a show of support for the crypto industry. Hui advocates for a more robust regulatory framework to protect investors and prevent fraud. Hui, who oversees developing policy direction for the crypto sector in Hong Kong, announced that the Financial Services and the Treasury Bureau (FSTB) is piloting an NFT offering, tokening green bonds and a central bank digital currency (CBDC) – the e-HKD, as part of a concerted effort to evaluate the possible use cases of cryptoassets and to establish a macro approach to regulation.

According to Bloomberg’s report:

Hong Kong’s crypto plan includes a mandatory exchange licensing regime due in June and a consultation on allowing retail trading. Officials have also permitted exchange-traded funds to invest in CME Group Inc. Bitcoin and Ether futures. Three such ETFs launched since mid-December have raised over $80 million.

Opinion

Hong Kong’s plans to reclaim its position as Asia’s financial and especially crypto hub are likely to succeed. With so many crypto-related companies based in Singapore now facing the country’s fast-evolving and “crypto-cautious” approach to regulation, one can see the value of moving over to Hong Kong. Not only is the city making a concerted effort to attract crypto-related firms, but it is working tirelessly to innovate the sector and to establish a regulatory framework in which these firms can safely operate. Such an approach does not only reassure consumers that they will be protected, but it offers the opportunity for the nascent industry to grow and, dare we say, thrive.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.