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The government of Hong Kong has been looking at whether to legitimize crypto trading for retail investors. The country is hoping that the move will help it regain its FinTech hub status.
Hong Kong wants to ease restrictions and recover some of the lost revenue, in comparison to China where cryptocurrency has all but been outlawed. Years of tight economic limitations and a political crackdown have badly damaged the Asian financial hub’s economy and caused a talent exodus that officials claim they now intend to stop.
“Hong Kong is open and inclusive towards the global community of innovators engaging in virtual asset businesses,” finance secretary Paul Chan told delegates at the fintech conference. “In a great many ways, we are telling the world that we are back in business,” he added.
The government announced that it will start a talk to examine how the retail sector “may be given a suitable degree of access”. Hong Kong was also ready to examine “property rights for tokenized assets and the legality of smart contracts,” it noted.
Hong Kong currently only allows clients with portfolios totaling a minimum of HK$8 million to participate in exchanges. Regular citizens would be able to participate in cryptocurrencies as well as virtual assets if permission to do so was expanded to retail investors. But doing it has risks of its own.
Global efforts to regulate the cryptocurrency market and safeguard investors have increased in response to its extreme swings and a number of high-profile crashes. Critics claim that cryptocurrency is the perfect tool for creating financial bubbles, concealing illegitimate money, and facilitating scams. In 2021, transactions involving digital currencies were outlawed in China, long one of the major crypto exchanges in the world. Following the collapse of several cryptocurrency exchanges, including one there, Singapore has tightened restrictions regarding retail trading. In the meantime, Japan recently eased some of its stricter guidelines for listing tokens.
Hong Kong was previously somewhat of a hotspot for cryptocurrencies due to its status as a doorway for China to the global markets. The city then implemented a voluntary licensing system for significant exchanges in the year 2018; However, only BC Technology and HashKey got permission.