In November of 2020, Hong Kong’s Financial Services and the Treasury Bureau (FSTB) announced new framework would put all digital asset exchanges under the oversight of the Securities and Futures Commission. Limiting trading in cryptocurrencies to professional investors only.
Crypto industry body Global Digital Finance has now warned against the implementation of these laws. GDF, who represents a number of crypto firms such as OKCoin, BitMEX, and Coinbase, warned that the bill would likely push retail traders to adopt unregulated platforms in comments to the South China Morning Post.
GDF added that driving retail traders to these unregulated platforms would be counterproductive for regulators. As “that may create new areas of financial crime risk.”
Hong Kong’s Proposal Goes Beyond The Requirements Of The FATF
Furthermore, the GDF noted the fact that Hong Kong’s proposal goes beyond the requirements of the Financial Action Task Force (FATF) framework. It is actually closer to mainland China’s stance on cryptocurrency.
The organization even brought up the point that other FATF member countries allow retail investors to trade crypto. “Restricting cryptocurrency trading to professional investors only is different to what we have seen in other jurisdictions. Such as Singapore, the UK, and the US, where retail investors can buy and sell virtual assets,”
According to Hong Kong law someone must own a portfolio of HK$8 million (around $1 million US), in order to qualify as a professional investor. Under those requirements, only 7% of the city’s population would qualify.
The government consulted with members of the public and industry organizations throughout the month of January. With the consultation period is over. The proposal is expected to be turned into a bill and presented to the Hong Kong Legislative Council later this year.
Hong Kong has long been considered one of the most active regions for crypto investors. In large part due to its friendly regulations. If enforced, the new proposal would negatively impact the city’s leadership position in the industry.
