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Analysts Caution That Delayed Regulatory Actions Could Hinder Cryptocurrency Development in Hong Kong
As Hong Kong aims to position itself as a worldwide cryptocurrency center, specialists are cautioning that the city’s careful regulatory stance may impede its advancement in the swiftly changing digital assets landscape.
In a recent discussion, First Digital Trust, a crypto company based in Hong Kong, voiced apprehensions regarding the sluggish regulatory pace, highlighting the necessity for quicker advancements to align with industry changes.
At present, only two fully licensed virtual asset trading platforms, Hash Blockchain and OSL Digital Securities, are functioning in Hong Kong.
Crypto Exchanges in Hong Kong Await Regulatory Endorsement
Numerous other cryptocurrency exchanges are still pending their licenses, illustrating the city’s cautious strategy towards industry regulation.
Vincent Chok, CEO of First Digital, clarified the reasoning behind this deliberate tempo, noting that Hong Kong emphasizes investor protection over rapid regulatory measures.
“It is reasonable that Hong Kong’s regulatory stance is more conservative and slower in comparison to other regions, considering its commitment to safeguarding investors,” Chok stated.
“We anticipate seeing regulation accelerate to ensure Hong Kong does not lag behind the swift evolution of the industry.”
In a bid to strengthen its control over the sector, Hong Kong has criminalized the operation of unlicensed virtual asset trading platforms (VATPs) as of June 1.
The Securities and Futures Commission (SFC) also released an “alert list” of dubious and unlicensed trading platforms that may be targeting investors in Hong Kong.
This initiative is part of broader efforts to maintain market integrity while protecting consumers.
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On the regulatory side, advancements have been made in the oversight of stablecoins.
The Financial Services and the Treasury Bureau (FSTB) and the Hong Kong Monetary Authority (HKMA) recently published insights on local stablecoin regulation.
Shortly thereafter, Jingdong Coinlink Technology Hong Kong Limited, a subsidiary of JD Technology Group, announced its plan to issue a stablecoin pegged 1:1 to the Hong Kong dollar (HKD), with acknowledgment from the HKMA as part of its sandbox initiative.
Hong Kong Encounters Increasing Competition
Nonetheless, Hong Kong is contending with competition from other regions such as Dubai, which has been advancing in the stablecoin arena.
Tether, the largest stablecoin provider globally, disclosed plans to introduce a stablecoin pegged to the UAE dirham in partnership with UAE-based entities.
It is noteworthy that several companies have already begun to provide crypto custody services in the area.
Recently, the United Arab Emirates permitted Standard Chartered to offer such services, starting with Bitcoin and Ether.
As reported, Hong Kong has initiated its first series of ETFs centered on cryptocurrencies, potentially competing with popular Bitcoin products in the United States.
Harvest Global Investments Ltd., the local branch of China Asset Management, along with a collaboration between HashKey Capital Ltd. and Bosera Asset Management (International) Co., listed Bitcoin and Ether ETFs in the city on Tuesday.
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