Crypto investors are looking at Hong Kong as the city takes the lead in liberalizing the crypto market, engaging investors from China and US.
United States - June 1, 2023 —
Hong Kong will be allowing retail trading of cryptocurrencies from June 2023, as per an update from the Securities and Futures Commission and the regulatory body has also started accepting applications from exchanges to offer these services. Hong Kong just might emerge as the trendsetter for Asia’s financial hubs with the metropolis making it clear that it plans to welcome digital assets in a more comprehensive manner and embrace digital investors. The plans are ambitious but seem right on track to help Hong Kong become the Asian crypto capital.
This move from Hong Kong isn’t sudden since there was some buzz about Hong Kong attracting mainland Chinese institutions that are still struggling with crypto trading. Some analysts are suggesting that this might help investors who were struggling to maintain the flow of crypto funding in China as the country hasn’t been too welcoming of digital assets being traded. With Hong Kong legalizing crypto trading, many people who felt restricted by China just might switch over to Hong Kong to trade cryptocurrencies from June onwards.
Cryptocurrencies - Hong Kong: Revenue in the Cryptocurrencies market is projected to reach US $142.50 m in 2023. User penetration will be 16.1% in 2023 and is expected to hit 21.2% by 2027
As and when this happens, in June 2023, Hong Kong would have opened to doors to a serious influx of money, and this is not just about Chinese investors. Many central and east Asian nations are likely to study the emerging ecosystem in Hong Kong and the big investors are likely to draw comparisons across the global environment for crypto where even the U.S. regulators haven’t been the kindest to giving crypto the mainstream status it deserves. The U.S. government seems somewhat hesitant as the crypto industry moves ahead with optimism and the virtual asset industry is quick to seize an alternative—Hong Kong might just prove the perfect landing pad for crypto investors from the West.
Hong Kong's Financial Secretary, Paul Chan, says "In taking forward Web3, virtual assets and other financial innovations, the Government will continue to strike the appropriate balance between regulation and facilitation. Rest assured that we are committed to building a favorable environment for our fintech firms to thrive and prosper."
As Hong Kong moves towards allowing some retail investors to trade in a regulated manner, including large-cap tokens, industry watchers are talking about the worth of licensed exchanges in such rapidly changing ecosystems and sending a reminder to many nations that still prohibit crypto-related transactions, weighing down virtual asset trading. Some details are yet to emerge, like Hong Kong’s Securities and Futures Commission clarifying which of the larger tokens are getting the approval and some people are predicting the opening bell leverage being provided to Bitcoin and Ether but many other cryptos could garner more users there. Jasmy is one such crypto platform brand that has been making its presence felt across Japan and lately, in the Asian virtual assets landscape. China could see some of the better Web3 startups shifting base to the city as many are likely to be big on crypto assets, often seeking virtual funding via the crypto route. This might also set a precedence for other crypto hubs to emerge in Asia, such as Singapore and Dubai.
DBS Group Holdings plans to apply for a license that allows it to offer crypto trading services to Hong Kong customers as the Chinese territory pushes to become a hub for digital assets [Straitstimes.com]
Places that continue with clampdowns on crypto trading, assuming that this can insulate individual investors against speculative trading should also take notice that crypto trading is an emerging reality, and its vulnerabilities are at par with any other financial trading platform. Crypto trading has managed to sustain and multiply even as bigger retailing brands, including those listed on the stock exchange, continue with layoffs and rollbacks but the global crypto industry is set to expand its scope and Asia stands out as a preferred destination, more so with Hong Kong set to emerge as a crypto trading hub.
The crypto marketplace isn’t the bubble some people had tried to describe it as and when financial hubs like Hong Kong embrace it holistically, it sets a reality check for policymakers who are still feeling unsure about blockchain’s increasing potential. Hong Kong has further balanced the equation, putting an emphasis on centralized virtual currency exchanges being licensed, taking away the ambiguity that many people associate with the world of crypto. regulations are clearly defined about the custody of assets, updated details of asset owners, routes to resolve conflicts, and the standards of cybersecurity, crypto trading becomes more regulated.
When standards for accounting & auditing along with risk management of crypto assets are published, anti-trust sentiments about money laundering and illicit counter-financing can be settled for good—Hong Kong’s policymakers seem to have understood this as June 2023 promises to present a refreshing way to trade cryptocurrencies. The bullish sentiments about Hong Kong’s crypto policies have been underway for some time where the legislative framework was often suggestive of more leverage being offered to the traders and service providers. This, combined with the onset of the changes in June 2023, the city could offer a boost to virtual asset companies, fintech startups, and emerging cryptocurrency platforms. cryptocurrency gives digital currencies the status associated with legal tender or securities, assuring investors about investing and maintaining long-term portfolios in cryptocurrency.
This means more regulation of private digital currency possession and the exchange of cryptocurrencies between people and institutions. As Hong Kong regulates its cryptocurrency trading platforms, it also sets the tone for virtual asset trading elsewhere where more supervision and monitoring shouldn’t be a deterrent to a currency and an ecosystem that is set up on values of data democracy itself. Perhaps the opt-in framework should give way to more mandated, licensing protocols. This should amount to clarity about the scope of investing for retail investors, licensing requirements, clarity about professional investors, and this should help the crypto market become more mature. This could help as jurisdictions regarding the evolving crypto market take shape in other geographies, enacting laws that help to define the legality of activities like crypto mining and providing clarity which is often missing in regulations, such as some countries bringing crypto profit-making under the umbrella of corporate income tax.
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