Experts Warn: Slow Regulatory Moves May Stifle Crypto Growth in Hong Kong
Hong Kong is forging ahead to position itself as a major player in the cryptocurrency market, but there is growing concern about the city’s sluggish pace in setting regulations. According to industry players, this conservative approach might eventually place the city at a disadvantage in the rapidly advancing digital assets frontier.
Regulation Pace Too Slow Chafes Experts
First Digital Trust, one of the major crypto firms in Hong Kong, believes the regulatory pace of the city is “not keeping up with the development of the industry.” It urged that the process must be hurried if Hong Kong wants to stay competitive in the game. Currently, only two fully licensed virtual asset trading platforms operate in
Hong Kong: Hash Blockchain and OSL Digital Securities. Crypto Exchanges Await Approval
Many other exchanges remain waiting for regulatory approval to relaunch, full-scale crypto services. According to Vincent Chok, the chief executive of First Digital, Hong Kong’s regulators are taking a very conservative approach, and their primary focus is really investor protection.
It is understandable that Hong Kong’s regulatory approach is more conservative and slower compared with other jurisdictions, considering its emphasis on investor protection”, Chok said. “But regulation needs to move faster if Hong Kong is to keep pace with the rapid evolution in the industry.”
Legal and Regulatory Measures Tighten
Part of this regulatory clampdown, Hong Kong has made it a criminal offense to operate a VATP without a license since June 1. The SFC also published an “alert list” of suspicious and unlicensed trading platforms that are potentially targeting Hong Kong investors.
The moves will probably be indicative of the city’s growing effort to ensure market integrity while putting consumer protection first and foremost.
Stablecoin Oversight Progress
In the PRC, Hong Kong has only lately caught up with the developments of stablecoin oversight. Recently, local stablecoin regulation was addressed in the reports published by FSTB and HKMA.
In a response to these events, Jingdong Coinlink Technology Hong Kong Limited, a wholly-owned subsidiary of JD Technology Group revealed its intent to launch a stablecoin pegged 1:1 with the HKD as part of the HKMA’s sandbox program.
Hong Kong Faces Stiff Competition
Meanwhile, during the time Hong Kong still refines its regulatory framework, other jurisdictions have been on the move to attract crypto businesses. Dubai is one of the destinations that has now become a force to be reckoned with, especially in the stablecoin space.
Tether, the world’s largest stablecoin provider, announced plans last month for a stablecoin pegged to the UAE dirham, in partnership with local UAE partners. Meanwhile, Standard Chartered has received regulatory approval to offer crypto custody services in the region, starting with Bitcoin and Ether.
Hong Kong has meanwhile moved to retain its relevance with the launch of cryptocurrency-themed ETFs. Bitcoin and Ether ETFs were listed by Harvest Global Investments Ltd. and partners HashKey Capital Ltd., and Bosera Asset Management Co., International in the city on Tuesday.
With the crypto landscape continuing to evolve around the globe, the more conservative Hong Kong needs to balance cautious regulation against the speed at which this market is innovating today if it hopes to become a leading crypto hub.
