Hong Kong Government Opens Arms to Crypto Firms and Investors

Hong Kong: things are getting ready. The government has turned the corner on crypto and now wants to fully embrace it.

On October 31, the Hong Kong government issued a policy statement on the development of virtual assets in the Special Administrative Region (SAR).

The statement outlines the government’s policy and approach to developing what it called a “vibrant industry and ecosystem” for crypto in Hong Kong. He seems to be a flip-flop since the beginning of this year when he wanted strictly regulate crypto exchanges.

This decision was noted by crypto-billionaire Sam Bankman-Fried. He said he deeply appreciates that decision makers “engage constructively and optimistically with the people who matter most to the direction of an industry: the customers.”

Hong Kong has open arms

The statement covers a number of key areas, including vision and approach. The first step was to welcome crypto businesses with open arms.

“Hong Kong is open and inclusive to the global community of committed AV innovators [virtual asset] companies.”

In addition, it plans to put in place international standard risk mitigation safeguards while promoting sustainable innovation.

Hong Kong Securities and Futures contracts Commission (SFC) will conduct a public consultation on how to enable increased access to crypto for retail investors. Additionally, the government has stated that it will also be open to the possibility of having crypto exchange-traded funds (ETFs) in its markets.

It doesn’t stop there. The government is also open to future reviews of ownership rights for tokenized assets. Moreover, it studies the legality of smart contracts to facilitate their development.

There will be a number of pilot projects according to the statement. These include not fungible token issuance (NFT) for Hong Kong Fintech Week 2022. They also mentioned Green bond tokenization and a CBDC e-HKD. Financial Secretary Paul Chan said:

“Our political position on VA [virtual assets] is now clearly communicated to global markets and serves to demonstrate our commitment and determination to explore financial innovations with the global AV community.

Open the door to China?

Last week, former BitMEX CEO Arthur Hayes suggests during a crypto hug in Hong Kong. He said the move would likely open the door for China to re-enter the markets. This should boost the next bull run, he added.

“When [China] love crypto, the bull market will return. It will be a slow process, but the red shoots are budding.

Hong Kong could become a proxy testing ground for Beijing to experiment with crypto policy. Moreover, it can also serve as a conduit for Chinese money to flow back into digital assets.

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Robert D. Coleman