Hong Kong to Float Consultation as it Looks to Permit Retail Crypto Trading

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With so much positivity targeted at becoming a digital asset hub and a financial center, Hong Kong regulators are looking to legalize retail trading of cryptocurrency and exchange-traded funds (ETFs). 

In July, the results from a global crypto readiness analysis that explored the digital asset regulations and taxations rules in each country, the number of blockchain startups, the number of crypto ATMs, and the interest in the market per capita showed that Hong Kong was the most crypto-ready nation of the world, with the United States of America following closely.

However, in the heat of the Terra collapse-induced crypto winter alongside the lack of regulation of the crypto industry in Hong Kong, many Hong Kong institutional investors began to mention their plans to reduce their involvement with cryptocurrency. About 9% of retail investors said they were reducing their portfolio’s exposure to digital assets or finally removing crypto options in their investment plans.

The Asian country has now laid out a master plan which will analyze how retail investors “may be given a suitable degree of access” to tokens. The process has been set in motion and has intensified with contributions from several global crypto exchanges. With the new digital asset regime, crypto platforms that wish to offer their services to retail clients will need to receive a license. 

SFC Public Consultation for ETFs

Starting with the Securities and Futures Commission (SFC) launch of a public consultation that will potentially permit institutional clients to trade Virtual Assets (VA) with access to crypto through ETFs, according to the Hong Kong government.

Julia Leung, deputy Chief Executive Officer, and Executive Director, Intermediaries at the SFC said “We could be on the cusp of the future of finance if we get it right, but that’s a big if,” she said.

In another statement issued by the Financial Services and the Treasury Bureau, it was further stated:

“We recognize the increasing acceptance of VA as a vehicle for investment allocation by global investors, be they institutional or individual. Having these products launched in Hong Kong will provide the connectivity between VA players and traditional financial institutions, offering investors with well-designed products, hence promoting the overall growth of the sector in our market.”

There are possible plans for Hong Kong to launch its Central Bank Digital Currency (CBDC), Finance Secretary Paul Chan recently spoke about it

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