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Hong Kong Proposal on Crypto Regulations Not Entirely Bullish

Hong Kong is planning to fully open its doors to crypto asset trading and investment. However, reading the fine print of its crypto regulations proposals reveals a lot of restrictions and hidden catches.

Under a new licensing regime to take effect on June 1, 2023, all centralized crypto trading platforms in Hong Kong, or marketing to Hong Kong investors, will need SFC licensing, it read.

On Feb. 21, industry analyst Colin Wu highlighted some of the crypto regulations and restrictions the SFC plans to introduce.

Furthermore, any listed will need a background check on the issuers and developers. There also needs to be checks on the supply, demand, and liquidity of the tokens listed. Technical aspects of the blockchain, marketing materials, utilities, and legal risks will all come under heavy scrutiny.

This is all before a token can be listed on a crypto exchange in Hong Kong.

There will be an “acceptable index” for “eligible large-cap virtual assets,” the paper proposed. It also stipulated that it would bar crypto derivatives.

Wu also highlighted that licensed crypto exchanges should not participate in market-making activities. Furthermore, they will also need to have insurance to cover any potential risks.

(By Martin Young)

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