HONG KONG (AFP) – Hong Kong opened its arms to the virtual asset world yesterday, launching new retail-friendly rules for the city’s crypto exchanges.
The Chinese finance hub is pivoting to embrace crypto despite high-profile failures in recent months, including the meltdown of trading platform FTX, which wiped out more than USD1.5 trillion in the market.
China has had a strict crypto ban since 2021, but in Hong Kong – which operates on a separate legal framework – trading has been allowed though unregulated, meaning individual investors use unlicensed platforms.
The regulatory regime launched yesterday means that after a one-year transition period, all crypto exchanges in Hong Kong must be licensed, and will be able to take on retail clients.
“(The sector) fundamentally is going to stay despite all the risks… These activities have to be allowed in a regulated way,” the city’s financial services and treasury chief Christopher Hui told AFP.
The new rules have an emphasis on investor protection measures, like requiring exchanges to vet their clients and limit their risk exposure, as well as restricting trade to “large-cap” tokens such as bitcoin.
Crypto exchange OKX – founded in China but now based in island nation Seychelles – told AFP it was “committed to the Hong Kong market” and will apply for a licence.
“Hong Kong is making concrete strides and is building confidence among industry players,” said OKX’s global chief commercial officer Lennix Lai.
Regulators said they hope to move quickly to issue the first licences.
But a prominent activist investor in Hong Kong said yesterday the new policy lends credibility to a risky sector and endorses speculation.
“Hong Kong has a history of jumping onto financial bandwagons just as the wheels are falling off,” former investment banker David Webb told AFP.
