Hong Kong’s government wants to let individual investors trade in cryptocurrencies and crypto exchange-traded funds. They hope that this will help the city regain its status as a fintech hub.
Before, the city wanted only professional investors to be able to trade crypto. Now, planned rules for digital assets have been heavily criticised for stifling innovation, which has caused a lot of start-ups to move to other markets like Singapore and Dubai.
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In a keynote speech at the Hong Kong Fintech Week conference, Financial Secretary Paul Chan said that the government will start to talk with people about giving small investors “a suitable degree of access” to virtual assets.
“We want the global market to know where we stand on policy, and we want to show that we are serious about exploring fintech with the global virtual asset community,” he said.
The government will also look at the property rights for tokenized assets and think about making so-called “smart contracts,” which are transactions that run themselves based on inputs that have already been set up, legal.
Industry players said that these moves are likely to pave the way for real estate security token offerings (STOs). STOs are digital tokens that are based on the blockchain and represent ownership stakes or the right to income or dividends from real assets.
Andy Mehan, chief compliance officer for APAC at U.S. crypto exchange Gemini, said that the latest announcement could make Hong Kong’s rules the same as Singapore’s.
“People in the industry want to see consistency in the global regulatory regime,” he said. “Otherwise, bad actors will be able to take advantage of loopholes in places with less strict laws.”
Even though retail investors can trade in cryptocurrencies in Singapore, the country’s central bank has been discouraging speculative trading in cryptocurrencies and has put limits on how cryptocurrency services can be advertised in public places. It also suggests new steps to be taken.
Hong Kong’s latest move to legalise retail crypto trade would also set Hong Kong further apart from mainland China, which has a blanket ban on cryptocurrency trade.
“This is a good step because it shows that Hong Kong is taking a different approach to regulating its capital market,” said Adrian Wang, CEO of crypto brokerage Metalpha.
Related: Tencent weighs on Hong Kong’s stock market as a result of Japan’s positive GDP growth.
($1 = 7.8492 Hong Kong dollars)
(The spelling of the company’s name in the last paragraph has been changed to Metalpha.)
