Hong Kong takes a strong stand on crypto amidst FTX saga

According to an essay that was written on November 13th by the Financial Secretary of Hong Kong, Paul Chan, he is urging for a greater emphasis on transparency and competent supervision when dealing with digital assets in the face of the current FTX disaster.

Since the middle of this year, cryptocurrencies have crashed or related companies have gone bankrupt in the world. Last week, a large virtual currency trading platform also applied for bankruptcy protection.

Paul Chan

The essay is headed “Steadily promote the development of virtual asset industry in Hong Kong,” and it began by stating that the “Policy Statement on the Development of Virtual Assets in Hong Kong” bill that was issued last month offers a complete and balanced regulatory framework.

Moreover, Chan said the “risk-based” regulatory orientation aims to establish stable and favorable development circumstances for the sector, and pragmatically provided a number of pilot projects to test and enhance their level of applicability.

The policy demonstrates Hong Kong’s commitment and determination to explore financial innovation together with the industry. It also explicitly indicates their stance, which is in order to assertively embrace innovation, “there needs to be regulatory assistance that adapts and keeps pace with the times”, as stated by Chan.

He said that they have had many favorable comments and that many associated firms are also actively contemplating either extending their operations in Hong Kong or shifting their company to the region for growth purposes. He said that this is a very promising sign.

The government of Hong Kong is obviously making progress toward its goal of establishing a robust regulatory framework for the cryptocurrency market. A new licensing framework for virtual asset providers, the tokenization of green bonds, and the authorization of ordinary investors to trade cryptocurrencies are some of the plans that were disclosed at the latest FinTech Week held in early November.

Hong Kong official talks NFT, Metaverse, and web 3.0

As Paul Chan elaborated, many analysts have noted that the usage of blockchain has produced a decentralized network world, web3.0, which is the fundamental building technology that propels the Metaverse, enabling institutions or people to utilize NFT in conducting Peer-to-peer direct transactions.

Although research is still being conducted to determine how this characteristic can be applied to a variety of financial services, business transactions, and even enterprise services, the general consensus among industry professionals is that there is a significant opportunity for application development here, the finance secretary said.

The Central Bank Hong Kong Monetary Authority (HKMA) is also doing research on the digital Hong Kong dollar, which has the potential to act as a bridge and pillar between fiat currencies and virtual assets, as well as offer essential support for fostering an increase in the number of innovations.

Chan notes that HKMA will announce the next follow-up work in the near future. In addition, the central bank has already held a consultation in the past to investigate the best way to regulate stablecoins that are used for payment purposes.

The government official has expressed his dissatisfaction with the continuing scandal that has been plaguing the sector, but he has also said that he is not giving up on cryptocurrency or the technology that underpins it.

The wave of scientific and technological innovation in the past has led to leap-forward development of the economy and industry. Although the development process will inevitably encounter setbacks, the benefits and inspiration of the long-term results to future generations are still worthy of recognition.

Paul Chan

Lastly, he said that in order for the region to reap the benefits of technological innovation, it must do so while simultaneously protecting itself from the inevitable ups and downs and preventing any negative effects from seeping into the actual world.