Hong Kong signals a tough approach to regulating cryptocurrencies

Hong Kong will take a ‘tough’ approach to regulating the digital-asset sector, HKMA chief Eddie Yue said in an interview with Bloomberg.

Under the February-proposed rules, as of June 1, 2023, all centralized venues operating in the jurisdiction or dealing with local investors must hold a license from the Securities and Futures Commission (SFC).

In addition to licences for trading platforms, by 2024 authorities will introduce a mandatory licensing regime for stablecoins.

“We will allow [companies] to build an ecosystem here, and that is actually quite exciting. But that does not mean light regulation,” Yue explained.

He said that guidance for banks on servicing clients of crypto entities is currently being developed, with details to be provided soon by the SFC.

In recent years, measures to restrict digital assets were stringent, but they will be lowered to a “reasonable and sustainable level,” Yue added. However, he noted that authorities will not permit a repetition of the FTX situation.

In April, The Wall Street Journal reported that Hong Kong banks, including a unit of the Chinese state Bank of Communications, had begun taking crypto firms as new clients.

Later, Hong Kong authorities urged local banks to service and support licensed crypto firms.