Hong Kong is emerging as a preferred destination for crypto firms, with its pro-crypto stance and supportive regulatory environment. Despite other jurisdictions taking a step back from permitting crypto retail trading, Hong Kong is stepping forward, according to Neil Tan, Chair of the FinTech Association of Hong Kong (FTAHK).
Speaking at the Hong Kong WOW Summit in March, Tan said, “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.”
Hong Kong is set to introduce a licensing regime for crypto exchanges on June 1, which will also include retail trading. The Securities and Futures Commission (SFC) has proposed allowing retail traders access to licensed crypto platforms in its licensing regime proposals for Virtual Asset Service Providers (VASPs), noting that denying access could push traders to unregulated overseas platforms.
Tan believes that providing a legal framework for crypto and focusing on attracting talent and infrastructure providers is crucial to realizing Hong Kong’s virtual asset hub ambitions. He added that both the Chinese and Hong Kong governments recognize the opportunities in the region and are taking action to support inbound talent.
There’s a lot of talent across the border and right now there’s a fair amount of unemployment. There’s a lot of talent that’s coming from Big Tech and so forth that’s able to come into Hong Kong.Neil Tan said, referring to China.
Hong Kong is positioning itself to become a leading hub for Web3, with over 800 fintech companies already based in the city. The government has allocated $50 million to expedite the Web3 ecosystem.
Christian Hui, Secretary for Financial Services and the Treasury, disclosed that 23 crypto firms had already indicated their plans to establish their presence in Hong Kong, and that they were interested in learning more about the regulatory requirements, visa requirements for talent admission, and targeted support measures for the virtual assets and Web3 sector. Hui added that the licensing regime is expected to provide a clear regulatory framework that will instill investor confidence, ensuring that only quality virtual asset enterprises operate in the city.
The opening up of the financial industry to digital assets is a natural progression, as cryptocurrencies become more prominent, said Tan. He added that people are adopting crypto in their portfolios, whether on the retail side, high net worth or institutional investors, to gain exposure to these assets.
With Hong Kong’s pro-crypto stance and regulatory support, its ambition to become a leading Web3 hub looks more promising. The licensing regime will provide a clear regulatory framework, which will enhance Hong Kong’s status as a leading financial center and attract more investors to the city.