At the Hong Kong Web3 Festival this week, government representatives confirmed the city’s cryptocurrency promises as it works to establish itself as a fully regulated crypto center that attracts investment and Web3 entrepreneurs.
A Significant Step for Hong Kong
Financial Secretary Paul Chan Mo-po highlighted the significance of adequate rules and monitoring on April 12. He said:
“I believe that everybody has learned from recent events that appropriate regulations are a must to create a sustainable development environment and a more ideal space for development.”
SFC to Regulate DeFi
According to a recent article, the Hong Kong Securities and Futures Commission (SFC) likewise seeks to regulate decentralized finance. According to the agency, DeFi platforms won’t be DeFi because they will require a license.
As stated by Keith Choy, SFC’s head of the intermediates section, DeFi and CeFi should be treated the same.
“As such, as long as DeFi activity holds within the scope of securities and futures, it would be subject to the same regulatory requirements applicable to traditional financial activity,” he claims.
Hong Kong Crypto Exchanges to be Licensed
Notably, the SFC will have to grant licenses to all Hong Kong cryptocurrency exchanges under the new rules, which take effect in June. However, the licensing procedure is quite rigid, and the tokens they may list must meet stringent criteria.
Lily King, COO of cryptocurrency asset custodian Cobo, stated that “if Hong Kong really intends to regulate DeFi, this will mean it has a stricter [environment] than Singapore.”
A Growing Crypto Hub
The Web3 Festival is the largest since the city committed to become a center for virtual assets, with speakers like Zhao Changpeng, CEO of Binance.
As part of the city’s 2023–24 budget, the city’s government announced intentions to spend 50 million Hong Kong dollars ($6.4 million) in Web3.
It was also mentioned that the city will soon be home to the cryptocurrency exchange Gate.io. In particular, Gate Group said on February 22 that it will apply for a crypto license in Hong Kong so that it could launch “Gate HK.”