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Bitcoin sees threat from Hong Kongโ€™s new crypto regulation

Bitcoin sees threat from Hong Kongโ€™s new crypto regulation

Photo by Igor Son on Unsplash

Changing policies and financial regulations in Hong Kong have now targeted the burgeoning crypto space.ย  As per a statement by the cityโ€™s securities watchdog on Tuesday, Hong Kong will now require all cryptocurrency trading platforms to be regulated whether or not they trade securities.

Unregulated crypto exchanges may commit an “offense”

As per Reuters that the Hong Kong Securities and Futures Commission (SFC) had previously placed an โ€œopt-inโ€ regulatory framework for cryptocurrency trading platforms, but these had made it possible for some trading platforms to operate away from the regulatory radar, SFC CEO Ashley Alder said in a statement.

The watchdog head explicitly stated that all crypto trading platforms in Hong Kong would be regulated, supervised, and monitored under one of two regimes: the existing opt-in framework introduced by the SFC in 2019, with the proposed new licensing approach being that of today.

“Failure to do so would, of course, be an offense,โ€ Adler warned.

Bitcoin Hong Kong newspaper
A full-page Bitcoin ad in a Hong Kong newspaper earlier this year. Image: Apple Daily

Hong Kongโ€™s one of the worldโ€™s biggest financial markets and has been thus far been largely neutral on its position on cryptocurrencies. This has allowed crypto exchanges and banks โ€” such as BitMEX, Huobi, and Crypto.com โ€” to flourish in the region and provide services to clients globally.

Sam Bankman-Fried of FTX, a popular exchange based in Hong Kong, said they were looking into the matter after the news was released this morning. โ€œJust came out, [we are] investigating,โ€ he tweeted.

“Terrible” for Hong Kong

Bitcoin Association of Hong Kong, a non-profit based in the city that advocates for digital currency laws and education, conducted a poll on Twitter to assess the proposalโ€™s economic impact.

At press time, over 52% of the pollโ€™s 123 respondents felt the move was โ€œterrible for Hong Kong.โ€ The city is one of the few that boasts an accessible financial system with low taxes and ease-of-business, which may all be impacted.ย 

The think-tank further stated in another tweet:

โ€œWhat gets easily lost here is that this isnโ€™t a simple push for licensing. Even licensed exchanges wonโ€™t be allowed to sell Bitcoin to โ€œnon-accredited investors.โ€

The move comes a year after the SFC allowed crypto exchanges to join a temporary regulatory framework if they operated in Hong Kong. But the wait has not borne well.

Meanwhile, the new rules may see benefits for Singapore, a world-class financial center that rivals Hong Kong. Last week, US giant Fidelity Investments said it was partnering with a local firm to address the growing demand for Bitcoin by rich family offices in the city.

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