Hong Kong’s Crypto Licensing Regime Expected to Launch Next Month

Hong Kong’s highly-anticipated crypto licensing regime is expected to launch next month.

Vying to become a crypto hub, Hong Kong will release guidelines for crypto exchanges looking to launch there in May, per Bloomberg, citing Hong Kong’s Securities and Futures Commission (SFC) CEO Julia Leung.

Speaking Thursday at an event, Leung said the regulatory framework for crypto exchanges received over 150 responses during the public consultation process.

The public consultations launched last year sought to determine the best way to grant retail investors access to cryptocurrencies, as well as examine the possibility of offering crypto exchange-traded funds (ETFs) in the territory.

The new rules are also expected to let retail investors trade major cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) on June 1.

While crypto exchanges are currently permitted to operate in Hong Kong, investors with portfolios under HK$8 million, or roughly $1 million, are subject to certain restrictions under existing legislation.

The regulator is also conducting several pilot projects to assess the advantages of digital assets and their applications in financial markets, including the tokenization of green bonds and the development of Hong Kong’s own central bank digital currency (CBDC).

The SFC did not immediately respond to Decrypt‘s request for comment.

Hong Kong seeks to become Asia’s leading crypto hub

Despite Hong Kong’s efforts to adopt a more relaxed approach towards cryptocurrencies, questions remain over the impact it may have on the industry’s relationship with mainland China, where cryptocurrency trading and Bitcoin mining were first banned in 2017.

BitMEX founder and former CEO Arthur Hayes also chimed in on the matter last year, stating that access to Chinese customers will be essential to Hong Kong’s appeal to crypto companies.

“Hong Kong’s position as the most important crypto hub began to tumble gradually at first, and then quickly with the imposition of its zero-COVID policies. But now, it looks like something curious is happening,” he wrote, adding that “it is the ordinary wealthy Chinese people that power the Hong Kong economy.”

Hong Kong’s authorities appear to be confident that their efforts will pay off, too.

“Hong Kong is well-positioned to be a leading hub for Web3 in Asia and beyond, and we attach great importance to virtual assets and Web3,” Secretary for Financial Services and the Treasury Christopher Hui said last month.

According to Hui, Hong Kong had received interest from over 80 companies seeking to establish a business there. These included exchanges, blockchain infrastructure firms, security companies, wallets, and payment providers.

Nikkei Asia also reported last month that several Chinese crypto companies, including securities companies and banks that are interested in allowing clients to trade Bitcoin and Ethereum on licensed exchanges, are eying Hong Kong.

Cryptocurrency exchange Bitget has meanwhile announced the launch of a new trading platform for its Hong Kong users. According to last week’s statement, BitgetX Hong Kong intends to apply for the license under the Hong Kong Virtual Asset Service Provider (VASP) regime.