Hong Kong unveils policies to develop virtual-assets industry challenging Singapore for hub status
- Hong Kong will introduce a new licensing regime for virtual-asset providers and tokenisation of green bonds while allowing retail investors to trade digital assets
- The government says it will introduce steps in line with international standards to allow virtual-asset innovations to sustainably thrive in the city
Hong Kong has proposed a range of measures to develop the virtual-assets industry to promote the city as an international cryptocurrency hub as it vies with Singapore for the crown.
Singapore is also hosting a similar forum this week.
“Our policy stance on virtual assets is now clearly communicated to the global markets and it serves to demonstrate our commitment and determination to explore financial innovations together with the global virtual-asset community,” Financial Secretary Paul Chan Mo-po said via a video link. Chan could not attend in person as he caught Covid during a visit to the Middle East last week.
The government will introduce a new licensing regime for global virtual asset service providers to set up their businesses in Hong Kong, Christopher Hui Ching-yu, the Secretary for Financial Services and the Treasury, told FinTech Week.
Julia Leung, the SFC’s deputy CEO, said the commission issued a circular on Monday allowing fund companies to apply to issue ETFs with exposure to bitcoin futures and some major virtual asset indices.
HKMA CEO Eddie Yue Wai-man said tokenised bonds and digital cash have a lot of benefits.
If bonds are tokenised, trading and redemption can happen more efficiently and transparently using blockchain, Yue said at another session of the fintech forum. “That could even make possible real time tracking of the green impact of tokenised bonds.”
Yue, however, said all this would require proper regulation to prevent virtual assets from being misused for money laundering activities.
Industry players initially responded positively to the government’s new policies.
“Clearer regulatory guidance will bring new opportunities for Hong Kong’s brokerage and asset management sectors in embracing tokenisation for capital raising and offering virtual assets, which is increasingly popular among global clients,” said Ken Lo, co-founder and chief strategy officer of HKbitEX, a digital asset exchange for professional investors.
Cryptocurrency exchange OKX said the new government policies have given it the confidence to undertake a big expansion in Hong Kong.
“We are a lot more confident of increasing staff and to make [the Hong Kong office] the real Asia hub or even the global hub,” said Lennix Lai, director of markets at OKX. He said OKX would dedicate resources to fulfil the requirements of the new regulatory development.
“Hong Kong will dominate regional development of GBA cross-border blockchain infrastructure and blockchain ecosystem,” said Cheng, who is also a speaker at the FinTech Week. “Virtual asset financial markets, central bank digital currency payment, and GBA blockchain infrastructure are three pillars of strength that are quickly transforming Hong Kong into a global digital financial centre.”
Gavin Ho, strategy director at Hong Kong-based, cryptocurrency-focused Axion Global Asset Management, said the move will not have an immediate impact on the market, as the city’s retail cryptocurrency investors can access cryptocurrencies through overseas exchanges, regulated or otherwise.
But “it will be more exciting” in the longer term, if Hong Kong could “build on that and expand both the depth and breadth of digital asset offerings”, Ho said.