Hong Kong is moving ahead with legal measures for digital assets after two years of disruption to the industry, caused by China’s blanket ban on digital assets and the effects of a slowdown in economic indicators. after the epidemic stopped the growth of the sector.
In a bid to restore confidence in Hong Kong’s major retail investors, regulators have announced a regulatory licensing scheme for digital asset service providers set to take effect in 2023. Another plan by the special control zone where high-value virtual currencies are listed, but it is not clear which symbols are listed.
“Introducing official licenses in Hong Kong is one of the most important things for operators to do,” said Gary Tiu, a director of BC Technology Group. “They can’t shut down the consumer’s needs.”
Insiders say that in addition to large financial assets, other pre-listing requirements are considered on stock exchanges. Two key details are currency and membership of third party ‘crypto’ tokens.
“Just trading digital assets on its own is not the point,” said Michel Lee, president of HashKey Group. “The ultimate goal is to grow the ecosystem.”
Growing an ecosystem like Hong Kong to become a digital hub faces challenges such as its proximity to China. Analysts are unclear whether Chinese investors will be allowed to trade the tokens. Another reason for the difficulty is that it takes a lot of work to attract the firms to return to the control after the first exit.
Fraud at the hands of Hong Kong
Despite the issues hampering Hong Kong’s quest to stimulate the entire ecosystem, there are options available for operators that offer a ray of hope for enthusiasts.
The first is to create a legal framework to authorize and regulate exchange traded funds (ETFs). ETFs based on virtual assets are likely to attract a wide range of investors, including those with no prior knowledge of digital assets, said Elizabeth Wong, a senior director of the National Safety and Employment Commission.
Establishing a comprehensive regulatory framework independent of China will undoubtedly restore faith in the country’s digital assets industry. At one time, Hong Kong was the home of FTX and Binance, but harsh regulations led industry leaders to look abroad for a place to set up their headquarters.
With the departure of the giants, the scale of the digital assets industry in Hong Kong will be affected. Virtual currency transactions are at their lowest point in 2022, when the index for adoption dropped from 39 to 46.
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