Report: Hong Kong’s Crypto Commitment at Web3 Conference
As the West continues to crack down on the crypto industry, Hong Kong is moving forward with its plans to become a regional hub for crypto.
This week, at the Hong Kong Web3 Festival, government officials confirmed the city’s crypto promises. This is because Hong Kong wants to become a fully regulated crypto hub that attracts investors and Web3 startups.
On April 12, Financial Secretary Paul Chan Mo-po said again that having the right rules and supervision was the most important thing.
“I believe that everybody has learned from recent events that appropriate regulations are a must to create a sustainable development environment and a more ideal space for development.”
Regulate DeFi in Hong Kong
The Hong Kong Securities and Futures Commission (SFC) also wants to control decentralised finance, according to sources. The agency thinks that DeFi platforms will have to get a licence, which means that they won’t really be DeFi.
The head of the SFC’s intermediaries branch, Keith Choy, said that DeFi (decentralised finance) should be treated the same as CeFi (centralised or traditional finance).
“As such, as long as DeFi activity holds within the scope of securities and futures, it would be subject to the same regulatory requirements applicable to traditional financial activity.”
Lily King, COO of crypto asset custodian Cobo, commented that “If Hong Kong really intends to regulate DeFi, this will mean it has a stricter [environment] than Singapore.”
All Hong Kong crypto platforms will need a licence from the SFC once the new rules go into effect in June. But getting a licence is hard, and there are strict rules about which tokens they can sell.
Still, regional banks are getting more comfortable with crypto, which is not the case in the West. This week, Hong Kong’s biggest online bank said it would offer transfers and currency changes between crypto and fiat currencies.
CEO Ronald Iu said that ZA Bank will work as a settlement bank for its clients, letting them withdraw their crypto deposits in Hong Kong, Chinese, and US dollars.
Not For Retail in China
However, mainland Chinese buyers won’t be able to use Hong Kong’s cryptocurrency market because of the rules there.
It will give Chinese banks, companies, and businesses a legal way to get into crypto markets.
At the moment, HashKey and OSL are the only two platforms in Hong Kong that are fully licenced.
OKX president Hong Fang was optimistic, stating, “It’s a very fluid situation, but I can see Hong Kong being a very important hub for our team, together with the US and some other offices.”
OKX said in late March that it wanted to grow its business in Hong Kong by asking for licences for virtual assets.
