As the West continues to crack down on the business, Hong Kong is moving forward with its plans to establish itself as a regional crypto powerhouse.
According to sources, during the Hong Kong Web3 Festival, government representatives acknowledged the city’s dedication to the crypto industry. Their goal is to establish Hong Kong as a regulated crypto hub that will attract investment and Web3 startups. On April 12, Financial Secretary Paul Chan Mo-Po stressed the significance of having proper regulations and oversight in place. He stated that recent events have shown that these measures are necessary to create a sustainable environment for development.
Hong Kong To impose DeFi rules
The Hong Kong Securities and Futures Commission (SFC), according to reports, wants to oversee decentralised finance as well. According to the agency, DeFi platforms won’t be DeFi because they will require a licence.
DeFi should be seen in the same way as CeFi (centralised or traditional finance), according to Keith Choy, head of the intermediaries division at the SFC.
“As a result, DeFi activity would be subject to the same regulatory requirements applicable to traditional financial activity as long as it holds within the scope of securities and futures.”
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.”
The SFC will have to grant licences to all Hong Kong cryptocurrency exchanges under the new rules, which take effect in June. However, the licencing procedure is quite rigid, and the tokens they can list must meet stringent criteria. Regional banks are, however, becoming more accepting of cryptocurrencies, which cannot be true for the West. The biggest online bank in Hong Kong said earlier this week that it will provide transfers and currency exchanges between cryptocurrencies and fiat currencies. According to CEO Ronald Iu, ZA Bank will serve as a settlement bank for customers, enabling withdrawals in Hong Kong, Chinese, and US dollars from cryptocurrency deposits made through exchanges.
Chinese Retail Not Allowed
Due to the restrictions imposed by the authorities there, Chinese retail dealers.
It will give Chinese banks, organisations, and businesses a method to access the cryptocurrency markets legitimately. HashKey and OSL are the only two crypto exchanges in Hong Kong that are currently fully licenced.
OKX President Hong Fang expressed optimism, saying, “I can see Hong Kong being a very important hub for our team, along with the US and some other offices. It’s a very fluid situation.”
In late March, OKX made intentions to increase its footprint in Hong Kong by requesting licences for virtual assets.