Hong Kong’s Crypto Regulation: Slow and Steady Wins the Race?

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🌆 Hong Kong’s got a plan for crypto, and it’s not rushing into things. While Singapore has been quick to regulate, Duncan Chiu, a member of Hong Kong’s Legislative Council, says their patient approach will pay off in the long run. 💸

Asia’s crypto race is heating up, with Hong Kong and Singapore battling it out to become the region’s crypto hub. But crafting the perfect rulebook is no easy feat – it’s all about balancing investor protection with a welcoming environment for businesses and new capital. 🎯

Hong Kong’s common-law framework for traditional finance has made its economy one of the most open and free in the world. But when it comes to crypto, the city has been relatively slow, especially compared to Singapore. 🐢

Chiu believes that Hong Kong’s initial caution with respect to regulating crypto comes with advantages. “Being a late mover is a good thing sometimes because you have a clear picture,” he said. 🤔

Building regulatory alignment

One of the key issues Chiu wants to work on in the LegCo is building a clear classification for different types of digital assets, such as cryptocurrencies vs. stablecoins, while also working with global regulators to ensure alignment among them. 🌐

“We need clear definitions and segmentation,” Chiu explained. “Some assets should be regulated like securities, while others should remain unregulated, like memecoins.” 📜

A dedicated crypto regulator?

Some jurisdictions, like Dubai, have created their own separate regulator for virtual assets. Chiu initially supported the creation of a digital version of the Securities and Futures Commission (SFC), but Hong Kong’s government has instead chosen to keep crypto oversight under existing financial regulators. 🏛️

Chiu sees establishing OTC trading and custodian regulations as the next major priorities for the LegCo, while leaving building rules around crypto derivatives and leveraged trading to the SFC and crypto exchanges. 📈

LegCo’s crypto priorities

Chiu considers crypto regulation a top-five priority, but he acknowledges that not all of his fellow LegCo members share this same urgency regarding crypto regulation. Some want to focus on building more stringent investor protection mechanisms first. 💼

However, there’s only so much legislative bandwidth available. Hong Kong’s job market is weak, and the real estate sector is on the precipice of a painful correction. Hong Kong is also caught between the U.S. and Mainland China in Donald Trump’s next trade war, making an economic recovery challenging for the territory. 🌪️

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2025-02-10 20:27