Hong Kong is taking another look at its crypto regulation as lawmakers fear the current framework could be a deterrent for exchanges.
During a parliamentary questioning session yesterday, Christopher Hui, Secretary for Financial Services and the Treasury, said that the Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC) are reviewing regulations regarding digital assets.
HKMA and the SFC will “keep in view market developments and review the requirements on VA-related activities as appropriate,” Hui stated.
Hui made the remarks in response to a lawmaker who questioned whether regulators would accelerate the vetting process for crypto licenses.
He added that licensed corporations or registered institutions can distribute crypto-related products after notifying the regulators, and they “do not need to apply for modification of licensing conditions.”
As of 1 June, all crypto trading platforms in Hong Kong must be licensed by the SFC or must be in the process of applying for one.
Hong Kong lawmaker, Duncan Chiu, described the city’s licensing regulations as “excessively stringent” and expressed concern that the rules could be pushing exchanges away.
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Chiu stated that these license withdrawals from exchanges have “shaken the confidence of market participants in Hong Kong’s push to develop Web3.”
Last month, Hong Kong announced it would be launching a subcommittee to focus on drafting cryptocurrency regulations.
“To promote the development of Web3 and virtual assets in Hong Kong, the HKSAR Legislative Council recently established a Subcommittee on Web3 and Virtual Asset Development,” said Johnny Ng Kit-Chong, a member of the Hong Kong Special Administrative Region Legislative Council.
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However, in a bizarre turn, Hong Kong is looking to focus on DeFi and the Metaverse.
“The emerging technologies of DeFi and the metaverse, which are closely connected to the broader virtual asset and Web3 developments, will likely present various opportunities for the financial services industry in Hong Kong,” said Enoch Fung, CEO of the AoF and executive director of the Hong Kong Institute for Monetary and Financial Research.
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