Hong Kong To Release Licensing Details For Virtual Asset Businesses In June
Stablecoin Regulation Expected In 2024 As Hong Kong Looks To Become Regional Crypto Hub
By: Samuel HaigDeFi News
Hong Kong is moving quickly to regulate and foster a digital asset industry, with plans to introduce stablecoin regulations next year.
Hong Kong’s secretary for financial services and the treasury, Christopher Hui, broke the news during the Aspen Digital Web3 Investment Summit on Monday. Hui also said Hong Kong is targeting June of this year to launch its licensing framework for Virtual Asset Service Providers (VASPs).
The news comes as Hong Kong seeks to position itself as a regional powerhouse for blockchain and digital assets. Last year, Hong Kong said it wanted to bolster its fintech and web3 industries after harsh pandemic lockdowns drove many developers and tech executives to rival jurisdictions such as Singapore and London. More than 800 fintech firms currently operate in Hong Kong.
Despite Hong Kong’s supportive stance, however, mainland China is showing no interest in changing its prohibitive cryptocurrency regulations.
Hui said Hong Kong is well positioned to emerge as a global hub for web3, emphasizing the Hong Kong government’s commitment to supporting the promotion and development of web3 technologies and applications.
“Web3 is not just a buzzword or a hype. It is a paradigm shift that will transform the way we interact with information, value, and trust on the Internet, or on the future metaverse,” Hui said. “It has the potential to enable more decentralized, efficient, and inclusive platforms and services that empower users and creators.”
In October 2022, Hong Kong’s government issued a policy statement on the development of virtual assets, paving the way for regulated entities to offer crypto products. The territory also adjusted its securities rules late last year to allow regulated entities to operate Exchange-Traded Funds (ETFs) tracking virtual assets.
The HKEX exchange launched Bitcoin and Ether ETFs managed by CSOP Asset Management in December. Tech giant Samsung also issued a “blockchain” ETF providing exposure to the Chicago Mercantile Exchange’s Bitcoin futures in January.
“Within a few months time, we are glad to see that three [virtual asset] futures ETFs have already been listed and traded on the Hong Kong Stock Exchange,” Hui said.
Invest HK, the government department overseeing foreign investment in Hong Kong, said it received more than 80 expressions of interest from international digital asset firms looking to establish operations in Hong Kong since publishing its policy document in October 2022. These include digital asset exchanges, wallet providers, payment processors, blockchain infrastructure companies, and network security firms.
Hui also outlined several central bank digital currency (CBDC) projects that Hong Kong is currently working on.
He said Hong Kong is collaborating with Beijing on testing a digital Renminbi for cross-border payments and is working with other central banks on various cross-border digital currency projects.
Hui added that local officials are closely examining the feasibility of issuing a digital Hong Kong dollar.