SBF criticizes Hong Kong’s license regime as the government consults the public on retail crypto investment

• Sam Bankman Fried calls Hong Kong crypto regulations “classist.”
• Hong Kong is seeking public opinion on allowing retail investors crypto access.
• SBF and other investors are skeptical of Hong Kong’s regulations.

FTX CEO Sam Bankman Fried on Crypto regulations

Sam Bankman Fried (SBF) criticized regulations which limit crypto investment to big ticket investors. The billionaire investor was speaking in a webinar at the Fintech Week 2022 in Hong Kong.

He argued that the requirement of being a wealthy investor to invest in crypto assets was  “deeply classist and deeply racist,” and that it benefited only the rich, which is not fair to those who are qualified (but may not be wealthy).

“We want to make sure that people know what they are accessing, that they know the risks, and can make reasonable judgment calls, so implementing a knowledge-based system to determine access is more effective than a wealth-based system,” he added.

SBF had proposed a crypto regulatory framework wherein people could trade freely unless blocked or prevented from trading – a system involving ‘Blacklists’ and ‘Blocklists.’ This system is different from the ‘Whitelists’ and ‘Allowlists’ model which involves blocking those to trade who have not been allowed explicitly.

Hong Kong: a global financial center

Hong Kong’s policy regarding cryptos, especially crypto asset exchanges is being considered harsh and unclear. SBF was referring to the licensing regime proposal of 2018 which mandated Virtual Asset Service Providers (VASPs) to service only those investors holding at least $1 million in liquid assets. The regulation will take effect from March 2023.

Hong Kong is among the world’s top global financial centers. However ever since the 2019-20 protests against Chinese interference and the pandemic, its economy and global clout is under the scanner. Given this recent history, finalization of crypto regulations will certainly help its economy.

The Hong Kong government announced that it would be receptive to cryptos and the VA economy. A public consultation process to evaluate opening crypto investments for retail investors has been scheduled. Investors have expressed mixed reactions on regulations – some are skeptical if the government will open cryptos to retail investors while others are optimistic regarding the same.

“Hong Kong investors are the most sophisticated globally. Many retail investors would already have had some holdings in digital assets. I think it’s irresponsible and illogical for the government to say, ‘hey, now you can’t even trade them,’” said Executive President of Hashkey group. 

Co-founder of Bitcoin Association of Hong Kong, Leonhard Weese argued that “The law, as it is proposed, is likely going to pass and it is going to be interpreted as excluding retail access.” He added that the new announcements provided little clarity on the regulations.

CEO of Hong Kong’s real estate mogul New World Development, Adrian Cheng was optimistic of the announcements and said Hong Kong was “back into the game.”

SBF tweeted that the Hong Kong government’s announcements were welcome but too late. He was obviously referring to his company’s translocation from the city to the Bahamas.

Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.

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