Hong Kong Warns ‘Regulations Will Be Tight’ As It Opens Doors To Crypto Companies In June

Hong Kong may be opening its doors to cryptocurrency companies in its bid to become an international crypto hub, but it does not intend to ease up on its virtual assets regulations. In fact, a top official warned weeks ahead of the start of a new licensing regime that such regulations “will be tight.”

“Our regulations will be tight,” Hong Kong Monetary Authority (HKMA) Chief Executive Eddie Yue Wai-man said at the Bloomberg Wealth Asia Summit this week, according to the outlet.

“We will let the industry develop and innovate. We will let them create the ecosystem here, and that actually brings a lot of excitement,” the executive noted before adding, “But that doesn’t mean light-touch regulation.”

Starting June 1, cryptocurrency exchange platforms will be allowed to offer their services to regular customers in the country. This is under the new licensing system whose guidelines are anticipated to be released sometime this month.

Last month, SFC CEO Julia Leung said the guidelines, which have been anticipated to provide support and a framework for cryptocurrency trading platforms planning to establish their trading services in China’s Special Administrative Region, would be out in May.

Hong Kong has had very tight cryptocurrency regulations over the past few years, according to Yue. These have already been reduced to a much lower, “reasonable and sustainable level,” although the executive firmly said the city-state would never allow an FTX-like event.

Aside from this, the HKMA is also gearing for a mandatory licensing regime for activities related to stablecoin, which could become available by 2024, as per the city-state’s de facto central bank.

During the Hong Kong WOW Summit held in March, FinTech Association of Hong Kong (FTAHK) Chairman Niel Tan commented that the licensing regime that would commence in June would also include retail. He also noted that the city-state’s move to allow crypto retail trading meant Hong Kong was “stepping forward,” unlike Singapore and the U.S. which both seemed to be stepping backward in terms of crypto retail.

“If there’s access to [crypto] in a legal and regulated way, then I’m sure participants will come. It is a ‘build it and they will come’ because there are no other options. The options are dwindling, actually,” Tan said, adding that both China and Hong Kong recognized talent and tried to do something to support this.

“There’s a lot of talent across the border and right now there’s a fair amount of unemployment,” Tan said about China at the time. “There’s a lot of talent that’s coming from Big Tech and so forth that’s able to come into Hong Kong.”