Hong Kong to adapt crypto regulations to evolving industry

Hong Kong financial regulators are prepared to adjust their approach to cryptocurrency regulation as the industry develops, according to Financial Secretary Christopher Hui.

Speaking at a parliamentary sessionHui said the Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC) would consider market trends when designing regulations. He said:

The HKMA and SFC will continue to monitor market developments and review requirements on VA-related activities as appropriate.

Hui’s comments came in response to questions about the possibility of speeding up the cryptocurrency licensing process and relaxing rules for intermediaries distributing crypto assets. He clarified that licensed companies and registered institutions can distribute cryptocurrency-related products after notifying regulators, without the need to change their licensing conditions.

This debate follows the withdrawal of license applications by several of the world’s major cryptocurrency exchanges, including OKX, Gate.io, and HTX, ahead of the June 1 deadline set by the SFC. After this date, all cryptocurrency trading platforms operating in Hong Kong must be licensed applicants or “deemed to be licensed.”

The stringency of Hong Kong’s licensing rules has drawn criticism from some quarters. Lawmaker Duncan Chiu expressed concern that overly strict rules have deterred major global exchanges from entering the Hong Kong market. Recent Opinion ArticleChiu argued that these withdrawals have undermined confidence in Hong Kong’s efforts to establish itself as a Web3 hub.

The cryptocurrency landscape in Hong Kong

In early May, Hong Kong approved the launch of six Bitcoin (BTC) and Ethereum (ETH) exchange-traded funds (ETFs). The products in question were issued by China Asset Management (ChinaAMC), Bosera Asset Management and Harvest Global Investments and allow exposure to cryptocurrencies without the need for technical knowledge.

Earlier this month, the Banque de France (BDF) and the Hong Kong Monetary Authority also They signed a memorandum of understanding on bilateral collaboration on the development of tokenization and wholesale central bank digital currencies. The two regulators are willing to explore interoperability between their digital currencies and transactions between countries.