Hong Kong wants to permit cryptocurrency retail sales
A number of start-ups have moved to other markets, such as Singapore and Dubai, after the city, which had earlier suggested restricting cryptocurrency trade to professional investors, received harsh criticism for planned laws for digital assets that would have stifled innovation.
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In an effort to restore Hong Kong's reputation as a fintech centre, the government has proposed enabling ordinary investors to trade in cryptocurrencies and crypto exchange-traded funds.
A number of start-ups have moved to other markets, such as Singapore and Dubai, after the city, which had earlier suggested restricting cryptocurrency trade to professional investors, received harsh criticism for planned laws for digital assets that would have stifled innovation.
Financial Secretary Paul Chan announced in a keynote speech to the Hong Kong Fintech Week conference that authorities would begin a consultation process on providing retail investors with "a suitable degree of access" to virtual assets.
To demonstrate our determination to explore fintech with the international virtual asset community, we want to make our policy stance clear to the global market, he said.
Additionally, the government will look into the legality of so-called smart contracts, which are self-executing transactions whose outcomes depend on pre-programmed inputs, and assess property rights for tokenized assets.
Industry insiders predicted that these actions would open the door for real estate security token offers (STOs). STOs are tokens built on the blockchain that represent ownership stakes or grant investors the right to income or dividends from physical assets.
According to Andy Mehan, chief compliance officer for APAC at American cryptocurrency exchange Gemini, the most recent declaration may bring Hong Kong's regulations into line with those of Singapore.
According to him, "industry participants want to see consistency in the global regulatory environment because otherwise, bad actors will have opportunity to exploit loopholes in jurisdictions with less stringent rules."
Legalizing small-scale bitcoin trading would further distinguish Hong Kong from the rest of China, where cryptocurrency trading is completely prohibited.
According to Adrian Wang, CEO of cryptocurrency brokerage Metapha, "this is a great move since it sends out a strong statement that Hong Kong is taking a different strategy to regulating its capital market."
