Hong Kong has announced a plan to allow retail investors to trade digital tokens such as Bitcoin and Ether. This is a significant step towards its goal of becoming an international crypto hub. It contrasts with the US’s crackdown on cryptocurrency.
According to a consultation paper, Monday’s regulator stated that individual investors would be permitted to trade larger coins on licensed exchanges by the Securities and Futures Commission. However, safeguards like knowledge tests, risk profiles and reasonable limits of exposure will need to be in place.
The agency did not specify which tokens with large capitalization would be permitted for retail investors. It stated that coins should be included in at least two independent, investment-ready indexes. One of these should have experience in the traditional financial sectors.
The consultation period ends on March 31. The goal is to allow retail trading under the new licensing system for crypto exchanges. This will take effect on June 1. A spokesperson for the SFC stated that Ether and Bitcoin, which are the largest digital assets in terms of market value, will likely be listed on Hong Kong platforms.
At the end of October, Hong Kong shifted to a pro-crypto stance as part of an overall effort to revive the city’s reputation as a financial centre. Officials want to learn from last year’s $1.5 trillion digital asset rout as well as a series of global bankruptcies like the collapse of FTX. They want to create a mandatory regulatory framework to attract firms and protect investors.
The consultation paper did not specify any crypto indexes that would be used as a reference for a taxonomy of allowed tokens. Exchanges would have to ensure that listed assets are available for trading by individual investors.
CME Group’s Bitcoin and Ethereum futures have been allowed by the government. The government also sold its inaugural digital green bonds this month.
As a result of a series of crypto probes in America, digital-asset executives are being drawn to Europe’s friendly policies.
“The Next Bull Run”
If Beijing loosens its ban on crypto-related activities on the mainland, Hong Kong’s pivot could open up an avenue for mainland Chinese investment.
Cameron Winklevoss is the co-founder and chief executive officer of Coinbase Global Inc. He tweeted Sunday that his “working thesis” is that the next bull run will start in the East.
Justin Sun, the founder of the Huobi Global crypto exchange, applied for a Hong Kong crypto trading license and launched a new trading platform there. Sun announced this on Twitter Monday. He said that the upcoming exchange, Huobi Hong Kong will be geared towards institutional investors and individuals with high net worth.
Tuesday saw a rally in Chinese crypto- and blockchain-linked stocks. OKG Technology Holdings Ltd., a digital-asset company, jumped up to 22% in Hong Kong. New Huo Technology Holdings Ltd., a crypto platform operator, grew as high as 12%. Software specialist Shenzhen Forms Syntron Information Co. in mainland China added 10% at one time.
Hong Kong faces many challenges in achieving its ambitions, not least the downturn in the virtual-asset industries that has seen thousands of jobs disappear. The 2022 bust has only partially reopened crypto markets.
Gradual investment may cause companies to hesitate until Hong Kong’s policy landscape is clearer.
The current city’s crypto exchange regime is voluntary and only allows clients with portfolios exceeding HK$8 million ($1 million). Only two other companies have permits: BC Technology Group’s OSL Bourse and HashKey Group.
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Chris Munch is a professional crypto writer, researcher, and journalist with extensive experience in the cryptocurrency and blockchain space. With a passion for innovation, Chris brings a unique and insightful perspective to the world of crypto and blockchain. He has written numerous articles and research papers on a variety of topics, including market analysis, investment strategies, and the latest developments in the industry. With a background in finance and economics, Chris has a deep understanding of the economic and financial forces that drive the crypto market.
He is constantly researching and studying the latest trends and technologies, ensuring that he is always up-to-date on the latest developments in the industry. Chris’ writing is characterized by his ability to explain complex concepts in a clear and concise manner, making it accessible to a wide audience of readers. In addition to his writing, Chris is also a sought-after speaker and commentator on crypto and blockchain-related topics. He has appeared on numerous podcasts, webinars, and other events, sharing his knowledge and expertise with audiences around the world.
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Author
Chris Munch is a professional cryptocurrency and blockchain writer with a background in software businesses, and has been involved in marketing within the cryptocurrency space. With a passion for innovation, Chris brings a unique and insightful perspective to the world of crypto and blockchain. Chris has a deep understanding of the economic, psychological, marketing and financial forces that drive the crypto market, and has made a number of accurate calls of major shifts in market trends. He is constantly researching and studying the latest trends and technologies, ensuring that he is always up-to-date on the latest developments in the industry. Chris’ writing is characterized by his ability to explain complex concepts in a clear and concise manner, making it accessible to a wide audience of readers.
