Hong Kong has reiterated its dedication to implementing strict and comprehensive regulations on cryptocurrencies to enhance investor protection and combat financial crimes. In a recent blog post on Feb. 2, Christopher Hui, the Secretary for Financial Services and the Treasury in Hong Kong, emphasized the region’s motto of “same activity, same risk, same regulation.” This motto guided the creation of a licensing system for virtual asset service providers (VASPs) in Hong Kong.
Mr. Hui highlighted that VASPs operating in Hong Kong prior to the introduction of the new licensing regime were given a transitional period to adjust to the new regulatory framework. However, to continue their operations beyond the transition period, these service providers must submit their licensing applications by Feb. 29. The Hong Kong Securities and Futures Commission (SFC) is prepared to take action against unqualified players with “no-deeming notices” and enforce a deadline of May 31 for non-compliant entities to cease operations.
Furthermore, Mr. Hui stressed the importance of regulating over-the-counter venues, which played a role in fraudulent activities involving unlicensed cryptocurrency platforms last year. Amidst these regulatory changes, investors are advised to exercise caution regarding the volatility of virtual assets’ intrinsic value and limit their transactions to platforms licensed by the SFC to avoid potential fraud.
Recently, Hong Kong approved selected platforms to offer Bitcoin (BTC) and Ethereum (ETH) trading to retail investors under strict supervision by the SFC. It is reported that around ten firms are considering offering such investment products, with half already making progress and potentially launching the region’s first spot crypto ETFs in the coming months.
HashKey, a certified crypto exchange in Hong Kong, is in discussions with asset managers to introduce spot crypto ETFs, sparking speculation that Bitcoin spot ETFs could be available by the first quarter of 2024. Harvest Fund Management’s Hong Kong branch has also begun the process of launching a groundbreaking BTC ETF and has submitted a formal application to the SFC.
Despite its proximity to China, Hong Kong maintains its unique legal system and is establishing itself as a distinct player in the cryptocurrency industry. The region continues to assert its autonomy and is actively shaping its position in the world of digital assets.