Tightening noose: Hong Kong joins EU, US, South Korea and Singapore in tightening crypto rules, report says
- In 2023, 17 jurisdictions including Hong Kong, the EU, South Korea, Singapore, and the US, tightened cryptocurrency regulations
- Almost half of the jurisdictions that tightened crypto regulations in 2023 increased consumer protection measures, according to TRM Labs
Governments around the world have increased their scrutiny of cryptocurrencies in the past year following a series of meltdowns, with many strengthening consumer protection in the volatile sector.
In 2023, 17 jurisdictions including Hong Kong, the European Union, South Korea, Singapore, and the United States, tightened cryptocurrency regulations, according to a report published on Monday by blockchain analytics firm TRM Labs.
Those strengthening protection accounted for 80 per cent of the 21 jurisdictions studied by the firm, with the latter representing 70 per cent of global exposure to cryptocurrencies, said TRM Labs.
In 2022, the collapse of several major cryptocurrency platforms, including the stablecoin TerraUSD and exchange FTX, led to a market rout that wiped out trillions of dollars in value.
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While 2023 began with the crypto ecosystem “reeling from the collapse of FTX”, the subsequent 12 months “saw an extraordinary boom in regulation across the globe”, the report says.
Among prominent moves, the European Union’s Markets in Crypto Assets Regulation came into force in June last year, and Hong Kong’s new licensing regime for centralised crypto exchanges went live, the firm noted.
Singapore, which the report described as “an early adopter of crypto regulation”, in November last year issued a set of rules aimed at curbing retail speculation in cryptocurrencies, and finalised its rules for stablecoins.
Meanwhile, South Korea and Australia also increased scrutiny of the cryptocurrency sector last year, the report says.
In the US, the Securities and Exchange Commission ramped up its enforcement actions against crypto firms in 2023, and the House Financial Services Committee also advanced bills last July aimed at creating a federal regulatory framework for the crypto market, with specific attention to stablecoins.
Almost half of the jurisdictions that tightened crypto regulations in 2023 increased consumer protection measures, according to TRM Labs.
It also noted that international organisations, including the G20, the Financial Action Task Force, the Financial Stability Board, International Monetary Fund, and the International Organization of Securities Commissions, all laid out global frameworks and policy recommendations for regulating cryptocurrencies.
Hong Kong, which in October 2022 announced a major initiative to support the virtual asset sector with the goal of becoming a global hub for such businesses, has implemented a mandatory licensing regime for centralised crypto exchanges that allow them to accept retail investors.
Eleven companies have so far submitted applications for the licence in the city, including OKX, one of the largest exchanges by trading volume.
