Experts Warn: Slow Regulatory Moves Could Hinder Hong Kong’s Crypto Growth
Date: 2024-09-16 Author: Gabriel Deangelo Categories: IN WORLD
As Hong Kong seeks to establish itself as a global crypto hub, experts warn that a cautious approach to regulation could hinder its growth in the rapidly changing digital asset sector.
In a recent interview, Hong Kong-based crypto firm First Digital Trust expressed concern over the slow pace of regulation, stressing the need to speed up the process to keep up with the industry’s development.
There are currently only two fully licensed virtual asset trading platforms operating in Hong Kong — Hash Blockchain and OSL Digital Securities.
Crypto Exchanges in Hong Kong Await Regulatory Approval
Several other crypto exchanges are still awaiting licenses, reflecting the city’s cautious approach to regulating the industry.
Vincent Chalk, CEO of First Digital, attributed the slow pace to Hong Kong prioritizing investor protection over rapid regulatory implementation.
“It is clear that Hong Kong’s approach to regulation is more conservative and slower than other jurisdictions, given its focus on investor protection,” Chalk said. “We hope that regulation will move faster to ensure Hong Kong can keep up with the rapid development of the industry.”
In an effort to tighten oversight of the sector, Hong Kong made it a criminal offense to operate unregistered virtual asset trading platforms (VATPs) on June 1.
The Securities and Futures Commission (SFC) also issued a “warning list” of suspicious and unregistered platforms that may be targeting Hong Kong investors.
These measures are part of a broader effort to ensure market integrity and consumer protection.
Progress in Stablecoin Regulation
On the regulatory front, progress has been made in terms of regulation of stablecoins.
Recently, the Financial Services and Treasury Bureau (FSTB) and the Hong Kong Monetary Authority (HKMA) published the results of a study on the local regulation of stablecoins.
Shortly after, Jingdong Coinlink Technology Hong Kong Limited, a subsidiary of JD Technology Group, announced its intention to issue a stablecoin pegged 1:1 to the Hong Kong dollar (HKD), with the HKMA recognizing it as part of its sandbox program.
Hong Kong faces growing competition
However, Hong Kong faces competition from jurisdictions such as Dubai, which is actively developing the stablecoin sector.
Tether, the world's largest stablecoin provider, has announced plans to issue a stablecoin pegged to the UAE dirham in collaboration with partners in the UAE.
It is worth noting that some companies have already begun offering cryptocurrency custody services in the region.
Most recently, the United Arab Emirates gave Standard Chartered permission to offer such services, starting with bitcoin and ether.
Hong Kong has reportedly issued its first batch of cryptocurrency-focused ETFs, creating potential competition for popular bitcoin products in the U.S.
Harvest Global Investments Ltd., the local unit of China Asset Management, partnered with HashKey Capital Ltd. and Bosera Asset Management (International) Co. to issue bitcoin and ether ETFs in Hong Kong on Tuesday.
