FTX fallout motivates Hong Kong watchdog to draft new rules
Hong Kong will also launch a public consultation to monitor the situation in crypto.
The Hong Kong Securities and Regulatory Commission plans to draft new regulatory provisions to implement under its new crypto regulation system in the wake of FTX’s collapse, according to local media reports.
The Commission reportedly argued that the FTX fallout had affected other virtual tokens and the entire crypto industry. The incident demonstrates the possible catastrophic effects of using a trading platform that is not fully regulated.
According to the Commission, the question is whether a regulatory framework can guarantee financial safety for investors.
The Commission also mentioned launching a public consultation to monitor the industry and update regulations accordingly.
Exchanges in Hong Kong
On Oct. 31, the government of Hong Kong issued a crypto policy statement and revealed that it was planning to create a “vibrant sector and ecosystem” for crypto.
The new regulations would allow crypto exchanges to apply for licenses to operate officially in the country.
The statement added that it would be mandatory for all exchanges to comply with anti-money laundering, counter-terrorist financing, and investor protection laws.
Hong Kong and crypto
Hong Kong has publicly adopted a positive stance toward crypto and accepts it as a part of the existing financial system. On July 17, Hong Kong Monetary Authority (HKMA) CEO, Eddie Yue, referred to the technological advantages of crypto and said:
“The technology and the bushiness innovation behind these developments are likely to be important for our future financial system,”
Hong Kong also classified NFTs as financial assets in June 2022 and achieved significant success from its Central Bank Digital Currency (CBDC) project mBridge on Oct. 2022.