Bloomberg has reported that Hong Kong will allow crypto exchanges to start work with retail customers. The licensing regime for them will begin on June 1. However, the rules for crypto companies' work in the city will not be without obstacles.
Chinese crypto journalist Colin Wu stressed this fact in a recent tweet, sharing a quote.
“Our regulation (of crypto) will be tight,” Hong Kong Monetary Authority Chief Executive Eddie Yue said in an interview at the Bloomberg Wealth Asia Summit on Tuesday. “We will let them create the ecosystem here and that actually brings a lot of excitement. But that doesn’t mean…— Wu Blockchain (@WuBlockchain) May 9, 2023
Crypto service providers to begin trading top coins
On June 1, Hong Kong will roll out a new licensing regime for cryptocurrency exchanges that will allow retail traders to buy and sell top digital currencies such as Bitcoin, Ethereum and others. The local monetary authority intends to turn Hong Kong into a global cryptocurrency hub. Therefore, the new licensing regime is the first step in this process. Besides, authorities are also eager to restore the city as a modern financial center after the pandemic and protests drove many IT experts to other countries.
No light-touch approach to regulation
According to the article, Hong Kong will begin the licensing regime for crypto exchanges and other blockchain start-ups, so they will be able to build an ecosystem there. The head of the local monetary authority, Eddie Yue, confirmed this with Bloomberg today at the Bloomberg Wealth Asia Summit. However, he added that exchanges should not expect "light-touch" regulatory rules to be applied to them.
Currently, there is guidance for banks on working with customers of crypto exchanges being developed. The local SEC will announce the new rules to allow individuals to invest in digital currencies too, according to Yue.
Currently, regulatory bodies around the world are striving to find better ways to regulate the crypto space after major exchange FTX suddenly collapsed in early November last year, with its founder Sam Bankman-Fried going to prison and the exchange owing billions of USD to investors.
Crypto exchanges forced to leave U.S.
Recently, the actions of the U.S. SEC have made several exchanges either completely leave the U.S. or open subsidiaries outside of it.
Major exchange Bittrex has closed down operations in the country, and the team is now focused on helping Bittrex Global to succeed. The Bittrex team commented on that, stating that U.S.-based operations are being wound down due to the regulatory uncertainty in the country and the lack of interest of the U.S. government in fintech advances.
Aside from that, leading U.S. exchange (and the only publicly traded one so far) Coinbase has received regulatory approval in the Bermuda Islands. The newly launched Coinbase International Exchange will be working with non-U.S. institutional customers, allowing them to trade Bitcoin and Ethereum perpetual futures contracts.
Last year, these contracts accounted for 75% of all the trading volume in the crypto space.