In a recent panel discussion, Elizabeth Wong, Director of licensing and head of the fintech unit of Hong Kong’s Securities and Futures Commission (SFC), talked about cryptocurrency and its regulation.
While stressing the differences in the regulatory environment between Hong Kong and mainland China, Wong said it calls for Hong Kong to establish its bill to regulate cryptocurrencies. The Hong Kong government has recently been making efforts to bring back the fintech companies that left the city due to stringent regulations.
Further, she confirmed that SFC is considering allowing retail investors to directly invest in virtual assets against the current rule allowing only centralized exchanges for professional investors to trade in crypto in the coming times. The current system has continued for over four years and counts professional investors as those with at least HK$8 million (US$1 million) in liquid assets. However, the director confirmed that the commission would carefully look into this and then decide to bring the change or continue with the current system.
The director also mentioned that the commission had relaxed to allow retail investors to invest in crypto assets over the past year. The regulator is now considering reviewing rules if they should allow retail investors to invest in exchange-traded funds (ETFs) with crypto exposure. Later this year, the commission will also call in public suggestions regarding allowing retail investors to invest in crypto and introduce a mandatory licensing condition for crypto trading platforms. Earlier this year, Hong Kong legislation also drafted a bill to treat crypto exchanges like traditional finance.
In 2019, SFC introduced a framework for regulating crypto trading platforms. Under that, centralized exchanges that provide services like crypto trading or intend to offer the trade of at least one security token may apply to the commission for a license. However, the license holder must provide services to professional investors only. Later in December 2020, SFC issued its first license to a digital asset trading platform.