New Crypto Rules Suggest Hong Kong Is ‘Testing Ground’ for China, Say Experts

Hong Kong is trying to reposition itself as a key crypto hub within the area, reopening buying and selling to retail buyers.

The regulatory necessities for digital asset buying and selling platforms will embrace “appropriate” onboarding processes, disclosures, and extra. Tokens to be traded on these platforms should cross a “minimal standards” that may make sure that “retail buyers ought to be much less liable to market manipulation.”

“We welcome SFC’s official stance and dedication to permitting digital belongings buying and selling by retail buyers in Hong Kong,” Hong Kong-based Lennix Lai, CCO of OKX, instructed Decrypt. “This is a crucial milestone for Hong Kong’s digital belongings trade because it continues to develop and develop.”

Massive tokens like Bitcoin and Ethereum are anticipated to cross given the itemizing standards; lower-cap tokens shall be in additional doubt.

These tips are resulting from come into impact on June 1, 2023, with the Securities and Futures Fee (SFC) but to approve any crypto buying and selling platforms. “Some changes mirrored within the last rules are very constructive: for instance, eradicating the prerequisite of acquiring a authorized opinion previous to itemizing a token for retail buying and selling,” mentioned Lai.

Hong Kong is a Particular Administrative Area managed by the Individuals’s Republic of China.

And resulting from this relationship, the newest crypto rule change might also set the desk for reintroducing crypto to mainland China, which successfully banned crypto again in 2017.

“This has been the town’s ‘conventional’ function for more often than not after 1997, Hong Kong’s handover to the Individuals’s Republic of China and the beginning of the ‘one nation, two programs’ mannequin,” Flowdesk’s head of authorized and compliance Anne-Sophie Cissey, instructed Decrypt.

With workplaces in Paris and Singapore, Flowdesk gives buying and selling infrastructure for market-making and different crypto-financial companies.

“It’s a main improvement in Chinese language considering for the reason that nation’s long-standing ban on digital belongings,” she mentioned. “Authoritarian regimes are, logically, very averse to something associated to decentralization and transparency, the core values of blockchain expertise. Therefore permitting Hong Kong to embrace a extra crypto-friendly stance in direction of crypto, from the skin, means that Beijing desires to make use of the territory as a testing floor.”

Hong Kong returns to crypto

These latest developments might also return Hong Kong to its standing as a crypto hub within the area.

Alongside China’s wider crypto crackdown, the riots that erupted in Hong Kong after the federal government launched a invoice that might have allowed the extradition of Hongkongers to China dampered the town’s crypto ambitions. The invoice was ultimately withdrawn.

“Following the crackdown on Hong Kong democracy earlier than and through the COVID–19 pandemic, Hong Kong has misplaced a few of its enterprise attraction,” Cissey mentioned. “It’s because one of the vital attractive options of its enterprise atmosphere, its distinctive regulatory frameworks and establishments, took a success. Essential banks and monetary establishments have left or downsized their operations fearing heavy-handed interference from the Mainland.”