Hong Kong: Things are afoot. The government has turned the corner on crypto and now wishes to fully embrace it.
On Oct. 31, the Hong Kong government issued a policy statement on the development of virtual assets in the Special Administrative Region (SAR).
The statement outlines government policy and approach to developing what it labeled a “vibrant sector and ecosystem” for crypto in Hong Kong. It appears to be an about-face from earlier this year when it wanted to strictly regulate crypto exchanges.
The move was noted by crypto billionaire Sam Bankman-Fried. He said he deeply appreciates it when policymakers “engage constructively and optimistically with the people who matter the most for an industry’s direction: the customers.”
Hong Kong has open arms
The statement covers a number of key areas including vision and approach. The first move was to welcome crypto businesses with open arms.
“Hong Kong is open and inclusive towards the global community of innovators engaging in VA [virtual asset] businesses.”
Furthermore, it plans on setting up international standard risk mitigation guardrails while promoting sustainable innovation.
The Hong Kong Securities and Futures Commission (SFC) will be publically consulting on how to enable more crypto access for retail investors. Additionally, the government stated it will also be open to the possibility of having crypto exchange-traded funds (ETFs) on its markets.
It doesn’t stop there. The Government is also open to future reviews of property rights for tokenized assets. Furthermore, it is researching the legality of smart contracts to facilitate their development.
There will be a number of pilot projects according to the statement. These include non-fungible token (NFT) issuance for Hong Kong Fintech Week 2022. They also mentioned Green bond tokenization and an e-HKD CBDC. Financial Secretary, Paul Chan, said:
“Our policy stance on VA [virtual assets] is now clearly communicated to the global markets and it serves to demonstrate our commitment and determination to explore financial innovations together with the global VA community.”
Opening the door for China?
Last week, former BitMEX CEO Arthur Hayes hinted at a Hong Kong crypto embracement. He said that the move would likely open the door for China to re-enter the markets. This is likely to spur the next bull run, he added.
“When [China] loves crypto, the bull market will come back. It will be a slow process, but the red shoots are budding.”
Hong Kong may become a proxy testing ground for Beijing to experiment with crypto policy. Additionally, it may also serve as a conduit for Chinese money to flow back into digital assets.
