Hong Kong will allow cryptocurrency exchanges to start working with retail clients, Bloomberg reported. Their licensing model will start on June 1st.
However, it is not without obstacles for crypto companies operating in the city. Chinese cryptocurrency journalist Colin Wu highlighted this fact in a recent tweet with a quote.
“Our regulation (on cryptocurrencies) will tighten,” Eddie Yue, chief executive of the Hong Kong Monetary Authority, said in an interview at the Bloomberg Asia Wealth Summit on Tuesday. “We’re going to have them create the ecosystem here, and that’s actually going to create a lot of excitement. But it doesn’t mean that …
—— Wu Blockchain (@WuBlockchain) May 9, 2023
“Our regulation of cryptocurrencies will be strict,” Eddie Yue, chief executive of the Hong Kong Monetary Authority, said in an interview at the Bloomberg Asia Fortune Summit on Tuesday. “We’re going to have them create an ecosystem here, which is really exciting. But that doesn’t mean there’s going to be light regulation.”
new licensing model
On June 1, Hong Kong will introduce a new licensing regime for cryptocurrency exchanges, allowing retail traders to buy and sell major digital currencies such as bitcoin, ethereum and cryptocurrencies.
The local monetary authority intends to turn Hong Kong into a global cryptocurrency hub. Therefore, the new licensing model is the first step in this process.
In addition, authorities also want to restore the city as a modern financial center after the pandemic and protests caused many IT professionals to emigrate to other countries.
Supervision will be “strict”
According to the article, Hong Kong will launch a licensing model for cryptocurrency exchanges and other blockchain startups so they can build an ecosystem there.
Eddie Yue confirmed this, but stressed that exchanges should not expect to apply “soft” regulatory rules.
Currently, banks have guidelines on how to work with clients of cryptocurrency exchanges that are under development. According to Yue, the local SEC will announce new rules allowing individuals to invest in digital currencies.
Regulators around the world are now grappling with finding better ways to regulate the cryptocurrency space following the sudden collapse of the FTX exchange in early November, the jailing of founder Sam Bankman-Fried and the exchange’s billions of dollars owed to investors.
Crypto exchanges forced to leave US
More recently, SEC actions have led some exchanges to either leave the US entirely or open subsidiaries outside the US.
Major exchange Bittrex has shut down its operations in the country and the team is now focused on making Bittrex Global a success. The Bittrex team commented that business in the US is stagnating due to regulatory uncertainty in the country and the US government’s lack of interest in the development of the fintech sector.
Additionally, Coinbase, the leading U.S. exchange (and so far the only public exchange), has received regulatory approval from Bermuda.
The newly launched Coinbase International exchange will work with institutional clients outside the United States, allowing them to trade bitcoin and ethereum perpetual futures contracts. Last year, these contracts accounted for 75% of the total trading volume in the crypto space.
- Hong Kong Prepares to Issue Licensing Guidelines for Cryptocurrency Exchanges
- Hong Kong confirms commitment to cryptocurrencies at Web3 conference
According to USA Today