As Hong Kong seeks to establish itself as a global center for cryptocurrencies, experts warn that the city’s cautious regulatory approach could hinder its growth in the fast-growing digital asset sector.
In a recent interview, First Digital Trust, a Hong Kong-based cryptocurrency company, expressed concerns about the slow pace of regulation, stressing the need for faster progress to keep up with the industry’s growth.
There are currently only two fully licensed virtual asset trading platforms in Hong Kong, Hash Blockchain and OSL Digital Securities.
Cryptocurrency exchanges in Hong Kong await regulatory approval
Several other cryptocurrency exchanges are still waiting for licenses, reflecting the city’s cautious approach to regulating the industry. Vincent Chok, CEO of First Digital, explained the rationale behind this measured pace, saying Hong Kong puts investor protection above swift regulatory action.
“Understandably, Hong Kong’s regulatory approach is more conservative and slower compared to other jurisdictions, given the emphasis on investor protection,” – Chok said.
“We hope that regulations will be introduced more quickly to ensure that Hong Kong does not lag behind the rapid development of the industry.”
In an effort to tighten control over the sector, Hong Kong has criminalized the operation of an unlicensed virtual asset trading platform (VATP) since June 1.
The Securities and Futures Commission (SFC) has also published a “warning list” of suspicious and unlicensed trading platforms that may be targeted by Hong Kong investors.
The move is part of a broader effort to ensure market integrity while protecting consumers. On the regulatory front, progress has been made on stablecoin oversight.
The Financial Services and Treasury Bureau (FSTB) and the Hong Kong Monetary Authority (HKMA) recently released findings on local regulation of stablecoin.
Shortly thereafter , Jingdong Coinlink Technology Hong Kong Limited, a subsidiary of JD Technology Group, announced its intention to issue stablecoin pegged 1:1 to the Hong Kong dollar (HKD), with HKMA recognition as part of its sandbox program.
Hong Kong faces increasing competition
However, Hong Kong is facing competition from other jurisdictions, such as Dubai, which has made strides in the stablecoin sector. Tether, the world’s largest stablecoin provider, has revealed plans to launch a stablecoin pegged to the UAE dirham in cooperation with UAE-based partners.
It is worth noting that some companies have already taken steps to offer cryptocurrency depository services in the region. The UAE recently allowed Standard Chartered to offer such services, starting with Bitcoin and Ether.
As reported, Hong Kong has launched its first batch of cryptocurrency-focused ETFs, meaning potential competition for popular bitcoin products in the United States.
Harvest Global Investments Ltd. the local branch of China Asset Management, in partnership with HashKey Capital Ltd. and Bosera Asset Management (International) Co. launched ETFs based on bitcoin and ether on the city’s exchange on Tuesday.
