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On July 3, Christopher Hui, the Secretary for Financial Services and the Treasury of Hong Kong, announced that local regulators would keep a close watch on market developments following the withdrawal of license applications by several global cryptocurrency exchanges.
License Withdrawals Prompt Policy Reevaluation by Hong Kong Regulators
Hui shared details regarding the regulatory approach to cryptocurrencies in light of recent events, revealing that Hong Kong’s regulatory authorities, including the Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC), would monitor market dynamics concerning virtual assets (VAs).
HONG KONG TO REVIEW CRYPTO REGULATIONS
In response to a lawmaker’s inquiry, Christopher Hui, Secretary for Financial Services and the Treasury, stated that the Hong Kong Monetary Authority and the Securities and Futures Commission will observe market developments and make adjustments… pic.twitter.com/j9jF55Y9lY
— Crypto Town Hall (@Crypto_TownHall) July 3, 2024
This statement was made following lawmakers’ questions regarding possible changes to crypto licensing standards after major global exchanges withdrew their applications.
Hui indicated that licensed entities and registered institutions are permitted to offer crypto-related products without altering their licensing terms, provided they notify Hong Kong regulators.
The backdrop of Hui’s remarks is the implementation of the New Capital Investment Entrant Scheme (New CIES), which was launched on March 1 to draw foreign investments and talent to Hong Kong.
Since its launch, the New CIES has garnered over 300 applications, with approvals granted for net asset evaluations and investment criteria.
To be eligible for the New CIES, applicants must have maintained at least HK$30 million in net assets or equity for the two years preceding their application.
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This requirement may have influenced the decision of several global exchanges to withdraw their applications in recent months.
For example, HTX retracted its Hong Kong crypto trading license application for the second time. Additionally, on May 23, Gate.io withdrew its trading license application and plans to delist tokens by August 28. While the specific reasons for these actions remain unclear, this requirement could have played a role.
Similarly, OKX withdrew its Virtual Asset Service Provider (VASP) license application on May 31 and halted trading services for local users.
These withdrawals have drawn criticism and scrutiny from members of Hong Kong’s Legislative Council, including Wu Shuo, who raised concerns about the crypto licensing framework and its effects on market confidence and the trajectory of Hong Kong’s virtual asset market development.
Regulators Alarmed by Increase in Crypto Scams
One of the objectives of the NEW CIES crypto regulation is to safeguard local investors from fraudulent activities. The regulation mandates that companies conduct crypto knowledge assessments for clients and inform them about the risks associated with trading crypto assets to fulfill this objective. This is crucial as the incidence of crypto scams continues to escalate in Hong Kong.
In March, a 46-year-old housewife in Hong Kong reported a loss of 7.1 million Hong Kong dollars ($908,000) after investing in a deceptive crypto platform.
The scam commenced in July 2022 when one of the fraudsters contacted her via Instagram, persuading her to invest in cryptocurrencies through a bogus trading platform. Another cybercriminal, impersonating a customer service agent, deceived her into transferring over $900,000 into 15 bank accounts from August 19, 2022, to March 4, 2023.
Hong Kong police have also observed a rise in crypto investment scams as digital assets gain traction in the region. Financial losses from these scams surged by 42.6% to HK$3.26 billion last year, up from HK$926 million in 2022. The number of reported incidents also increased significantly, from 1,884 in 2022 to 5,105 in 2023.
The post Hong Kong Regulators Plan To Review Crypto Requirements: Here’s Why appeared first on Cryptonews.
