Hong Kong has pushed forward with plans to let retail traders commerce cryptocurrencies because it vies with Singapore for supremacy as a digital property hub.
Below plans launched on Monday by the Hong Kong Securities and Futures Fee, the trade’s two largest crypto tokens — bitcoin and ether — can be opened as much as retail clients, and licensed exchanges can be required to make sure shoppers have “adequate data of digital property” earlier than they’re allowed to commerce. All digital asset buying and selling platforms working in Hong Kong or actively advertising and marketing to Hong Kong traders would have to be licensed by the SFC.
The proposals, which can first be topic to a six-week session with “ events”, would additionally require that not more than 2 per cent of shopper funds be saved in “sizzling wallets”, a time period used to explain on-line accounts seen as weak to hacks or phishing scams as a result of their keys are saved on-line.
Granting retail traders — who till now have needed to commerce crypto property on unlicensed exchanges — entry to licensed platforms would mark a giant step up in efforts to draw crypto companies to Hong Kong. The territory has lately been left behind by rival Singapore, which has allowed retail buying and selling however has been stung by a number of high-profile crypto controversies, together with final 12 months’s collapse of the dollar-pegged token terraUSD.
Singapore-based crypto hedge fund Three Arrows collapsed in June final 12 months, whereas a world manhunt for Do Kwon — co-founder of the corporate behind terraUSD — shone a world highlight on the city-state.
“This sends a robust message that Hong Kong desires to reclaim its standing as a world crypto hub,” mentioned Henri Arslanian, managing associate at crypto asset administration agency 9 Blocks Capital Administration.
“Many massive crypto corporations had issue working out of Hong Kong lately, particularly because of the Covid journey restrictions. This session will add to the renewed momentum that town is seeing,” he added.
The crypto trade is searching for to rebound after a 12 months outlined by plummeting costs, hundreds of job cuts and a disaster of confidence that led to the collapse of a number of high-profile firms, together with crypto alternate FTX, which was established in Hong Kong earlier than shifting to the Bahamas.
“In mild of latest turmoil and the collapse of some main crypto buying and selling platforms world wide, there’s clear consensus amongst regulators globally for regulation within the digital asset area to make sure traders are adequately protected and key dangers are successfully managed,” mentioned SFC chief govt Julia Leung.
Extra reporting by Chan Ho-him in Hong Kong