Hong Kong shows its desire to be a crypto hub with new regulations • TechCrunch

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As the US government continues to rein in the crypto industry with a series of regulations, other places are emerging as new hubs for the virtual asset industry. On Monday, Hong Kong proposed rules that would allow retail investors to trade certain “large-cap tokens” on licensed exchanges, a stark contrast to mainland China across its border where transactions related to cryptography are outright prohibited.

The city’s Securities and Futures Commission did not specify which large tokens would be allowed, although a spokesperson for the regulator said it would likely be Bitcoin and Ether, two of the largest digital assets by market value.

Since China’s crackdown on crypto trading, the country’s web3 startups have largely abandoned their home market and focused overseas. Some of the more resourceful have opted to set up new bases in friendlier places such as Singapore and Dubai, though they normally continue to keep developers in China to tap into the country’s large pool of affordable tech talent.

With Hong Kong’s introduction of a looser regulatory environment for cryptocurrencies, some of these exiled China-based Web3 companies may return and move closer to home.

China’s crackdown on crypto trading to protect individual investors from speculative activity now seems prescient, given the wave of bankruptcies and layoffs that have rocked the global crypto industry. But money and talent continue to flow to the web3 despite the bursting of the crypto bubble. It’s hard to imagine Beijing standing still while the rest of the world works on the building blocks that some say will spark a new wave of innovation as important as today’s internet itself.

Hong Kong, historically a financial hub, can potentially be a laboratory for Chinese policymakers to test the potential of blockchain with a buffer for the country’s one billion internet users.

The proposal presented by Hong Kong stipulates that all centralized virtual currency exchanges operating in the city or marketing services to investors in the territory must obtain licenses from the Securities and Futures Authority. The requirements “cover key areas such as secure custody of assets, know your customer, conflicts of interest, cybersecurity, accounting and auditing, risk management, anti-money laundering /the financing of terrorism and the prevention of market misconduct”. the ad reads.

“In addition to ensuring the adequacy of customer onboarding and token admission, other key propositions relate to due diligence, governance and token disclosures.”

In other words, centralized crypto exchanges must ban Hong Kong IP addresses until they obtain the necessary permissions to operate there.

The regulatory requirements are open for consultation until March 31 and the new licensing regime will come into effect on June 1.

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