Hong Kong throws open the doors to cryptocurrency even as debate rages on whether it’s a security or commodity
- The chairman of the US Commodity Futures Trading Commission (CFTC) Rostin Behnam called the ether token a commodity during a congressional hearing
- The US Securities and Exchange Commission (SEC) Chairman Gary Gensler argued that every cryptocurrency other than bitcoin falls under securities laws
The debate over whether cryptocurrencies are securities or commodities has continued among regulators in the US as it would determine which agency assumes primary oversight of digital assets.
“The [Biden] administration, like many administrations, has a lot of priorities. And it appears that providing a constructive atmosphere in the United States for cryptocurrency is not among those priorities any more,” Bill Hughes, Senior Counsel and Director of Global Regulatory Matters at New York-based blockchain software company ConsenSys, told Forkast in an interview.
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“I am pretty certain we will see more cryptocurrency firms, entrepreneurs and projects move to Hong Kong. It’s not guaranteed that Hong Kong will be the cryptocurrency hub it used to be, but Hong Kong’s decision to pursue its position as a cryptocurrency hub once again is noteworthy and of global significance,” Ben Caselin, chief strategy officer at Dubai-headquartered cryptocurrency trading platform MaskEx, told Forkast in an e-mail.
“There is a chance of more cryptocurrency firms moving to Hong Kong as they seek a friendlier environment. Firms could decide to move entirely or to open offices in the city to benefit from Hong Kong’s financial and business infrastructure,” said Denys Peleshok, head of Asia at London-based financial trading firm CPT Markets.
The cryptocurrency industry could tap Hong Kong’s financial sector for expansion and attracting talent. However, competition could remain fierce as other Asian majors look to lead developments in the industry.
“Hong Kong could be facing strong competition from Japan and South Korea, both of which have advanced regulation for cryptocurrencies. In this regard, Hong Kong could stand as a newcomer and could be obliged to put up some additional efforts to level the playing field,” said Peleshok of CPT Markets. “Both countries could provide a larger talent pool that cryptocurrency firms could need to develop more rapidly.”
Caselin of MaskEx added, “Both South Korea and Japan are much more focused on their domestic systems and populations. They play a very important role in the industry at large and for a long time Japan has been at the forefront of regulation.”
“What this means for Singapore is that tighter regulations could make it more difficult for some cryptocurrency trading platforms to operate in the jurisdiction and increase compliance costs for those that do. This could lead to some consolidation in the industry and potentially slow down its growth in the short term,” said Vincent Chok, chief executive officer of Hong Kong-based consultancy First Digital Trust.
“Hong Kong, along with Dubai and the UAE will be the most important cryptocurrency cities in Asia at large,” Caselin said.
“For Hong Kong, it might be less about adopting a new monetary network, and more around capital allocation, while in Singapore, tokenisation to expand the reach of its capital markets might be the right move. To each its own – we all have a role to play,” Caselin added.