Hong Kong’s digital asset ecosystem needs stronger guardrails and more education to protect investors, says HKMA CEO Eddie Yue

‘Those guardrails are important in order to provide the right controls on things like security, investor protection and anti-money-laundering risks,’ says HKMA CEO

Cryptocurrency related crimes are on the rise in Hong Kong, which saw 2,336 cryptocurrency-related complaints last year – a 67 per cent rise from a year ago

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Eddie Yue, Chief Executive of the HKMA, speaks during an interview at the SCMP office in Causeway Bay. Photo: Nathan Tsui

Published: 5:00pm, 6 Oct 2023Updated: 6:15pm, 6 Oct 2023

The development of Hong Kong’s digital asset ecosystem will need stronger guardrails and more public education to protect investors, the Hong Kong Monetary Authority’s (HKMA) CEO Eddie Yue Wai-man told the Post in an interview, as the city battles to limit the damage from the recent implosion of a cryptocurrency exchange suspected to have affected 2,305 victims who lost about HK$1.43 billion (US$182 million) of investments.

“Those guardrails are important in order to provide the right controls on things like security, investor protection and anti-money-laundering risks,” said Yue in an interview which followed last month’s JPEX scandal, which has dealt a heavy blow to the public trust in virtual asset trading.

While underscoring the need for consumer education, the HKMA launched a consumer protection against fraud charter in June, asking merchants to avoid sending hyperlinks to customers in their electronic messages. Electronic advertisements of the campaign are running in Hong Kong’s subway stations.

“To invest safely in the virtual asset space, [investors] need to go to the regulated exchange platforms - don’t go to unregulated ones,” Yue said while pointing to JPEX, which collapsed after the demise of FTX last year. He said both scandals “signified the importance of regulation”.

Cryptocurrency-related crimes are on the rise in Hong Kong, with the city’s police force reporting 2,336 cryptocurrency-related complaints last year – a 67 per cent rise from 1,397 cases logged in 2021. The cases involved about HK$1.7 billion in funds, a 106 per cent increase from the year before.

Hong Kong has been driving new policies and regulations that would promote virtual asset trading and push the city’s global leader ambitions in Web 3. Under this initiative, it has introduced new rules that allowed licensed cryptocurrency exchanges to accept retail traders.

Eddie Yue, Chief Executive of the HKMA, photographed at the SCMP office in Causeway Bay. Photo: Nathan Tsui