The cryptocurrency industry is expanding and the world regulators were waking up to keep pace with it. Joining the list is Hong Kong as its central bank revealed of setting up a regulatory regime for cryptocurrencies. This system is scheduled to be ready by July.
Hong Kong and Cryptocurrencies
Like most countries, Hong Kong currently did not have any specific legislation aimed at restricting cryptocurrencies. However, it was growing cautious of the increasing volatility and scams.
The most recent case was reported on 7th January wherein the users of a cryptocurrency exchange were unable to withdraw their funds since November 2021. Reportedly, at least seven people had filed police reports involving crypto exchange Coinsuper. The authorities were investigating a case where a person claimed to have bought crypto “via an investment company” and has been unable to withdraw since December.
The exchange has maintained a tight lip except when they responded on Telegram group asking the email address of the affected. However, reports state no further action has been taken yet.
Unfortunately, such incidents were the ones grabbing the attention of the regulators everywhere. Exchanges have remained central to Hong Kong’s regulatory ecosystem and the government was working on a bill to make licensing for crypto exchanges mandatory. It will make a part of the 2021-2022 legislative session.
Hong Kong’s Singapore connection
Competition has remained ripe between Hong Kong and Singapore. Hong Kong defends the title of the leading financial hub in the region while Singapore tries to challenge it. As the global economies try to regulate crypto, even Singapore was trying to act fast and act right.
However, the country was trying to find a balance between the two extremes, China and El Salvador. It is not planning to ban cryptos as a whole nor is it willing to accept any crypto asset as a legal tender. It may benefit from something visible in Hong Kong.
Hong Kong uses an “opt-in” regulatory regime for crypto exchanges which meant that they can apply to be regulated. It has already approved one firm and now it was working on the new licensing regime. The Hong Kong Monetary Authority is currently approaching the crypto industry from three dimensions: stablecoins that can be used for payments, investor protection, and how authorized institutions deal with digital assets, as per information available on its website.
Reportedly, the chief executive Eddie Yue added that HKMA plans to take on a so-called “same risk, same regulation” approach to crypto.