Hong Kong to restrict crypto exchanges to professional investors

HONG KONG (Reuters) -Cryptocurrency exchanges working in Hong Kong may have to be licenced by town’s markets regulator and can solely be allowed to present companies to professional investors, in accordance to authorities proposals printed on Friday.

FILE PHOTO: Representations of the digital forex Bitcoin and Ethereum stand on a motherboard on this image illustration taken May 20, 2021. REUTERS/Dado Ruvic/Illustration

Governments and monetary regulators world wide are nonetheless assessing whether or not and the way they need to regulate the cryptocurrency business. Investor safety and stopping cash laundering are explicit considerations.

Cryptocurrencies corresponding to bitcoin and ether have been on a roller-coaster journey this week which has raised additional questions on their potential as mainstream investments.

Dozens of cryptocurrency exchanges function in Hong Kong, together with a number of the world’s largest. The metropolis at the moment has an “choose in” strategy underneath which exchanges can apply to be licenced by markets watchdog the Securities and Futures Commission, however wouldn’t have to.

Hong Kong’s Financial Services and the Treasury Bureau (FSTB) has been consulting the market on modifications to these guidelines since final 12 months.

The FSTB mentioned on Friday in its session conclusions all digital asset (crypto forex) exchanges ought to be licensed in the event that they wished to function in Hong Kong.

It additionally mentioned “confining the companies of a VA trade to professional investors…. is suitable a minimum of for the preliminary stage of the licensing regime.”

Local monetary know-how and crypto business associations have opposed regulation stopping exchanges from providing companies to retail investors, warning this might drive exchanges out of Hong Kong and push investors onto unregulated venues.

According to Hong Kong legislation, a person will need to have a portfolio of HK$8 million ($1.03 million) to rely as a professional investor.

Regulators and governments in Asia have completely different attitudes to regulating cryptocurrencies and the exchanges on which they’re traded.

Under Singapore’s regime, crypto exchanges should be licenced, however can have retail investors as purchasers. However, China on Tuesday introduced a harder ban on banks and fee firms providing crypto-related companies which furthered a selloff that briefly wiped $1 trillion off crypto market capitalisation.

The FSTB mentioned it intends to suggest legislative modifications to flip its proposals into legislation within the upcoming 2021-22 session of town’s legislative meeting.

($1 = 7.7637 Hong Kong {dollars})

Reporting by Alun John and Twinnie Siu; enhancing by John Stonestreet

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